tv Wall Street Week FOX Business November 27, 2016 4:30am-5:01am EST
. anthony: welcome to "wall street week," the show for long-term investing. i'm gary kaminsky. >> and i'm liz claman. >> we hope you had a wonderful thanksgiving, back to business. donald trump's victory propelling the market to fresh highs. the dow broke through the 19,000 barrier for the first time ever on tuesday while all three major indices hit lifetime never before seen highs this past week. >> does the rally have legs? good haven manager and co-pm larry joins us now, were you
surprised what's happened since the election? >> we're primarily stock pickers, risk managers and try not to have make row view. we weren't surprised nor would we be upset if the market was down a lot. we look for areas of real opportunity. >> stock pickers, you have been in touch with the company since the election, are people feeling about better things? >> you know, i think there is some thought that there will be some change in certain areas as far as regulation related to certain industries, but for us, the idea is to find the handful, a small handful of investments where we think we have a lot of upside, not much downside and where we think we're going to earn a good return if the environment in macrosense never changes. it's amazing when you do that and the research is right, it's amazing how many positive surprises end up happening because you protected on the downside. >> let's let people know what do you and how you do it. half a billion in assets under
management with just about 20 names, is that correct? >> 20 to 25 names, a smaller bunch of that number makes up half of the portfolio. >> how do you pick a winner? how do you decide? that is a very limited number of names, they've got to be top shelf. what jumps out at you to say i'm buying that stock. >> we look at the price much cheaper than we think the underlying business is worth. we're looking for a management team we think is savvy and shareholder oriented. we're looking for something where we feel we have an edge in understanding the company or the industry. >> liz, so viewers understand, in a world where everyone is moving to passing, they're active and closet indexes, hugging the benchmark. what you're doing in terms of portfolio construction is making big bets. as a former p.m. myself, i applaud you for making the bets and putting the assets into the names.
i looked at top ten holdings, you have a big position in white mountain insurance, five billion market cap company. we used to have a big position in it as neuberger. you probably don't know the name. why do you like that stock? >> white mountain is a textbook example how to allocate capital to benefit your owners, ray beret owns the company, they have recently sold big divisions at wonderful prices, repurchased shares, they have over the years shrunk share count dramatically which benefitted the remaining owners. they have a pile of cash and they'll be opportunistic in returning the cash to owners or in making astute acquisitions which they have done over the years. they belong in the hall of fame for how to allocate capital to benefit their owners. >> you do bottomsup investing, you look not just at the horse but the jockey? >> very much so.
we like to be invested along management teams that have skin in the game, that have a demonstrated ability to be very clever. by the way, my partner keith and i are the two largest individual owners in the fund that we're aware of. >> you eat your cooking. on top of, that though, and gary knows this better than anybody, you go into unloved names. you took a lot of heat for going into the energy sect who are it was looking terrible. >> terrible. if you want to find bargains, you need to go where there's fear, disinterest and unpopular things happening around the industry. that's where the bargains are, and we don't just say that because it's a fun slogan, we say it because if you're searching for investments with minimal downside and lots of upside -- >> largest investment is a managing name. share that with us. >> wpx energy which is our largest investment recently, was a company that had a lot of gas assets, oil assets, a
high-cost structure and in the spring of 2014 acquired rick moncrief. a great background at burlington resources and continental resources with harold hamm, laid out a plan to remake the company. in midst of doing, that the perfect storm hit as far as oil going from 100 to 30. so the oil market crash was a cataclysmic event. 100 bucks to 30 bucks was a greater decline than anyone we've seen. trillion dollars of capex cut throughout the world, and during this period, rick cleverly sells certain assets, re-creates the company makes an acquisition and emerged from the downturn ready to play offense. he laid out a plan to grow oil and cash production 20 to 30% a year between now and 2020 without needing external financing. he bought stock for himself all along the way. when we were buying, the headlines were screaming negative.
we love that. >> let's leave viewers on this thanksgiving piecing with a piece of pie, nice slice of dessert. teach them when to sell, not just when to buy? >> when to sell is harder. we sell when we reach estimate of fair value. we sfel we feel something changed or we sell when we find something better to buy and run out of cash. the important thing is to be a business analyst, not to get shaken out by the movement in stock prices, i would encourage viewers, think about buying stock as buying a piece of a business or the same way you and friends buy an apartment building. don't get focused on the price bouncing around. that is your opportunity, if your analysis is right. >> great to see. >> you great to be here. >> so refreshing to see a portfolio that has name us that don't think of every day. what's the performance of the fund year to date? >> up 18% year to date. >> whoa!
brad. you were so vocal about that, let's talk about the retail investor and the fact that donald trump has said he wants to deregulate. that may be great for the business world, is it great for the investor? >> what's interesting is a lot of times regulation helps the incumbents and helps the establishment. they are complex and sophisticated, they have the lobbyists that find the way around the regulation. the regulation is designed to protect the interests of the everyday people. you can look at administration looking to deregulate and as long as they're replacing that with principled, high-level types of regulation rather than getting very specific, or even for every regulation, he's talked about taking away, for every rule you implement you take away two, as long as the ones we're implementing are standardization disclosures, more tranparency, will hold
businesses accountable and you don't need to rely on specific and complex regulation to do that. so i think a deregulatory environment can help the little person if it's done properly and thoughtfully and the right amount of accountability. gary: let's talk about iex, you were waiting for the sec to give you full approval. that's been done, what's happening with the exchange why. does it benefit the average investor? >> sure, september 2nd, we launched the newest stock exchange in america. we're backed and owned by long-term investors, franklin templeton, groups like that that own iex, during the application process you saw teachers funds from new york and texas and missouri and california back iex and what it means for the alternative is there is now an exchange and there's now a significant actor in the marketplace that really
first and foremost prioritizes their interests, and that contrasts against the existing exchanges and it's been well documented if you look at financials that tell you the story, their number one priority is selling high-speed data and technology, number one clients are high-speed traders. everyone has a right to choose their business path, for us the long-term investor and the company have been underserved in this market, that's just ironic. that's why the stock market exists. liz: you are so much smaller than nasdaq and the nyse, make your case to anybody buying and selling stock. why should i flip over to you? >> a lot of people don't know, i think nasdaq is the largest at 14%. it's not the difference isn't as dramatic as people think. the great thing about being in an exchange, before we were dark pool, it is hard to get grouped together.
iex built a market. the greatest thing about being an exchange our data is transferrable. execution quality, iex ranks number one, we rank number one because of the things we implemented to protect investors, things like the speed bump, discretionary, not sell advantages to specific people and that leads to the better outcomes. so we're targeted, if you buy 100 shares of microsoft through online broker, go for you. the market can suit you. if you're invested in a mutual fund and they're trying to buy a million shares of microsoft, it's a different situation and game for them. we look at really partnering with the institutional managers. i think that's our biggest effect on the everyday person is our work with the large institutional asset managers. gary: since you are owned by some of the large institutions or invested in by the large institutions, the institutions are trading every day, what are you seeing since the election obviously in terms of the
markets are up, we're hith all-time highs. what is your read through since the election what does it mean in terms of the next several months for the market? >> people sitting on their hands for a good part of the year especially since the election. people were shocked to how the markets responded to donald trump being elected and you're seeing excess cash being put to work. liz: is that the high frequency flash boys, the faster boys who gyrate the markets or fundamental thought from people who are parked on the sidelines? >> i think it's a little bit of both, i think the rally now, you're seeing excess cash being put to work. people at times have to be in motion, they have to be investing and you can't miss out on a rally that's been sustained. again, dow hitting all-time highs. it's one of the things where people need to participate in the market especially when they're marked against certain index us and see the
performance of the indexes. gary: right. you've been identified as entrepreneur as a disrupter, you feel better about being a disrupter in the economy in the next couple of years under the new administration? >> absolutely. especially in finance, especially in institutional finance for us, a lot of the disruptions we've seen in finance is consumer finance. people dealing with their end customer is the person on the other hand buying the app.tiona. our biggest client is jpmorgan. institutional finance really hasn't been disrupted but i think we're going to see a trend of more companies looking to disrupt institutional finance, that ends up being good for the end user and for us it's an opportunity to take the business model and keep pushing it forward. gary: great for the update. thank you very much, great to see you again. stay right there. "wall street week" will be right back.
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. liz: it's been a week and a half since the election and donald trump is meeting with some of the biggest names in the business world, right? as he looks to fill key positions for his cabinet and throughout his administration. some of the folks heading in and out of the trump tower include billionaire wilbur
ross, fedex ceo fred smith, tech guru petre thiel and legendary investor carl icahn along with new england patriot owner bob kraft. gary: many of those guests on "wall street week". joining us fox business all-stars melissa francis and charlie gasparino. right into, this charlie, a lot of business people, this has to be good news to you. >> i like all the names, bob kraft i was acquainted with through my contacts in the nfl. that's the good part of what donald trump is doing. the bad part is he wants to hire your friend, howard ford, a liberal democrat to sell a boondoggle structure to congress, that was leaked in the paper. that shows that donald trump is not a conservative, okay? i did not than i was going to be defending harold here. big tax and spend guy. gary: sorry, charlie, is harold ford, may be considered for transportation secretary.
>> the former congressman. gary: and let me say, if he did take a job like that he'd be absolutely fantastic because he understands the politics side of it. >> he likes to spend money. gary: understand ands the capital market. >> likes to spend money. >> the infrastructure will have to be a public private partnership. >> a big boondoggle. conservatives are rolling in the -- william buckley is rolling in his grave right now. >> it is the opposite of a boondoggle. he is the efficient use of capital. they're bringing people in who know how to deploy government capital in an efficient way, people like wilbur ross and understand finance who understand we're living in a low interest rate environment you get business to put up the money, they structure the plan they're watching every dollar. >> i never thought i would hear a conservative say government spending is an efficient way to set it up. >> what are you going to do? liz: donald trump, a
businessman at the helm of the presidency. >> thanks for informing me. liz: proudly have any bridge contract and say wait a minute, there's redundancy here, we can line item. nobody is pulling the wool over his head. >> who said this? >> donald trump. >> are you kidding me? >> the finance guys. liz: that's a boondoggle. you don't think -- >> he can get in there and make sure it's all. gary: i hate to say this, it's three against one. >> i'll take it any day. >> he's never afraid of it. gary: did you think we had a better situation with the government spending over the last eight years? >> you are comparing like the lowest bar. it's like being the tallest midget in the room. liz: not politically correct. >> we're in the age of trump, we can almost say anything be and elected president. liz: that's backpeddling on a
lot of things he said before. >> that's the thing, donald is sounding like a liberal. backing off the walls, the fence, backing off obamacare. he's the going to keep the good parts. how do you keep the good parts? >> that's called a compromise. >> you think he will pay for it? gary: a good business person realizes you can't do it all. you prioritize, he's prioritizing right out of the gate on national security and the economy. >> i hope he does the tax cut. i've spent my money, i bought a new beemer. >> for me? >> i just hope he does the tax cut. >> you are helping the economy. >> he can back away from the wall, embrace obamacare, he doesn't have to indict crooked hillary. she's getting off too. liz: we're coming up on the time that president obama had already picked timothy geithner as treasury secretary, who do you think gets treasury secretary? >> that is such a --
>> jamie dimon? >> i want jamie dimon to do it. it would be amazing. i don't think he loss of donald trump either but i think they know jamy would be amazing in that role. >> donald says he doesn't respect him. >> i don't believe it. liz: representative jeb hensarling. what do you think? >> that's a good call. i'm definitely in the jamie dimon camp. >> donald trump through one of his surrogates doesn't respect him because jamie dimon turned him down. >> donald trump isn't getting together with anyone right now who said he didn't like him, mitt romney? >> donald trump likes the last guy who says hello to him. let's be real clear here, the chances, jamie dimon is more than a theoretical chance, if the president calls you and offers you a job, you likely take it, right? the likely one is steve mnuchin, the other is jeb
hensarling. you want him in the head house finance committee to roll through the stuff, the tax cuts. >> i completely agree with him. liz: he wants the federal reserve to be obviously under a tighter rein here, hensarling and trump spoke about that during the election, the realistic choice steve mnuchin. >> i'm not in the room and donald trump has priority. he's got to pick a secretary of state. gary: you were hang out with mnuchin at the salt conference in vegas. i saw you hanging out. >> we weren't like -- gary: yes, you were! >> we didn't take a sauna together. [laughter] >> i actually don't know the guy very well. i spoke with him, he's a really smart guy. what i like about him, i like the nonfrills guy understand thats a budget. gary: charlie gasparino. liz: melissa francis, thank you for joining us. gary: that does it for "wall street week," enjoy the rest of
take your cyanide and gunite. if you wake up we will see you tomorrow. ♪ john: it is the season of giving. so where should you give? should you give this man money? what about this man? >> thank you. john: actually, that's me. don't give money to beggars like me. governments must spend more. >> medicare, medicaid, social security. john: this government really helps the poor. >> everybody in cleveland. >> by any measurement this is not working. john: i am glad more people figure that out. >> commerce, entrepreneurial capitalism takes more people out of poverty. john: even some in