Deconstructing Alpha

EP 21: Inside First Eagle with Julien Albertini

February 15, 2023 Geremy van Arkel, CFA® Season 1 Episode 21
EP 21: Inside First Eagle with Julien Albertini
Deconstructing Alpha
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Deconstructing Alpha
EP 21: Inside First Eagle with Julien Albertini
Feb 15, 2023 Season 1 Episode 21
Geremy van Arkel, CFA®

For institutional investors, First Eagle has long been one of the most revered investment firms in the nation. Their mutual funds have been a pillar of strength in Frontier portfolios, providing consistent performance year after year, for decades, even during some of the most difficult of times. If you ask them how they have been able to achieve this track record, their response will likely be “scarcity” and “persistence”.  What does that mean? Tune in for unprecedented access to the secrets of First Eagle’s success.

Show Notes Transcript

For institutional investors, First Eagle has long been one of the most revered investment firms in the nation. Their mutual funds have been a pillar of strength in Frontier portfolios, providing consistent performance year after year, for decades, even during some of the most difficult of times. If you ask them how they have been able to achieve this track record, their response will likely be “scarcity” and “persistence”.  What does that mean? Tune in for unprecedented access to the secrets of First Eagle’s success.


EP 21 First Eagle_mixdown

Tue, Jan 03, 2023 8:56AM • 43:10


business, invest, portfolio, called, investors, eagle, resilient, investment, company, fund, wealth creation, built, podcast, scarcity, replicate, global, france, long term, markets, schindler



welcome to the podcast deconstructing Alpha. I'm your host Jeremy van Arkel with Frontier asset management. And on this episode of deconstructing alpha, we've got a really special show for us.



Normally, I record these introductions before I record the interview with the portfolio manager. But this time, I was so impressed with our interview. And it was such an interesting topic and, and really just new information. You know, after after managing portfolios for 30 years, you rarely hear new information. You know, I was really excited to have this podcast, I waited a long time to interview somebody from First Eagle, and it didn't disappoint. It really delivered great, new and interesting insight. And so today's today's podcast is going to be an interview with Julian. Albertini, who is on the global value team at First Eagle, and works on the First Eagle Global Fund. And for investors in frontier and maybe many RAS out there. They're very familiar with the First Eagle Global Fund. It is a fund that's been around 40 years. And it has been a constant near constant position in frontier portfolios. When we first started buying this with a previous firm, I would say dating back to 1989, approximately 1989. So we've been very familiar with the first stable global fund, and it's been a position in our portfolios, we've, we've kind of understand understood a lot of the nuances to this fund. But But there's still sort of a mystery about this fund, right. And this was, I think we really uncovered a lot about sort of almost the secret sauce over at front over at First Eagle with this interview. So if you know for superglobal, or you manage portfolios, or you select securities, this is going to be really powerful information to you. And really First Eagle Global's special, their secret advantage is that they tend to perform very well in bear markets, right, so so the whole ideal of a value investor, or maybe even a conservative investor is to make enough for keep up in good markets, but somehow lose less than down markets and to somehow lose less than down markets consistently, right. And we all know that market timing or go into cash is this is something that just is not consistent, that's often just luck. And so you have to build in layers into your portfolio management process, to help perform well in down markets and to help perform well, somewhat reliably in down markets. And so over our history since 1989, of holding this fund, you know, we've been through many down markets with this fund. So those could be 00. But the tech wreck, the financial crisis of Oh, eight COVID, the COVID quarter, and not 2022. And all of these being large scale, bear markets, right, where a lot of losses have occurred. And this fund for single global has held up very well through



all of those environments. And the magic is, is that they don't, you know, while they do own some cash from time to time, and they do own gold pretty consistently in their portfolio, you know, those those allocations aren't generally enough to, to have avoided as much as much of the down markets as they have in the past. And so there's something built into the stock selection of this portfolio that really helps them perform well in down markets. And that's what I really wanted to uncover here today. So we didn't really cover allocation too much. We didn't cover the sort of, you know, why do you hold cash? And how much cash do you hold? Or why do you own gold? We also, you know, we have a gold podcast from First Eagle if you'd like to know more about that. But this is really how do you own approximately 80% equities in your portfolio, and have those equities hold up? Well, through bear markets. And that's what I tried to uncover today. And I think that you're gonna find this very insightful. So that's a long introduction. It's a long introduction, because I thought it was such an insightful podcast. Rarely do I sort of get moved by new angles or new nuances to portfolio management. I've interviewed a lot of managers. And so this is going to be enlightening. But before we dive into this, please stay on the podcast till the end for important notes and disclosures. Those are our compliance Cisco disclosures and they are at the end of this podcast. But so let's get started. Without any further ado, let's dive right in with Julian Albertini with First Eagle Global Value team. Julian, welcome to the podcast. I'm so honored to have you here as a guest. And I'm really looking forward to being able to gain some insight into these this this famed global value team you have there at First Eagle.



Thank you for having me, Johnny. Very happy to be here. Awesome. So let's start with something simple. Right? So what's your role at First Eagle and can you tell us a little bit about about your background?



Also, as you probably have guessed from my accent already, I'm a French I grew up in France went to college, in France, after college, I moved to London work for Morgan Stanley, the American investment bank, I moved to the US to attend Columbia Business School, I was part of the value investing program there and spend my summer in business school actually yet at Lehman Brothers is similar to Father Nate and got



a job offer from Lehman, just a few weeks before they went bankrupt. So it was my first lesson in the importance of business resilience. And I worked for a couple of funds after business school and I was lucky to join First Eagle about a decade ago, and First Eagle to me was always, you know, one of the few guilds that practice the craft of global long term value investing. And so I was very happy to, you know, to join the firm, love the job, love my colleagues. And first of all, for daycare, and one of the I'm one of the portfolio manager of the Global Value funds. Excellent. So and where are you located? Where are you calling in from? New York City, New York and your are you? Are you guys still in the same office that overlooks Central Park? We are Yes. For our listeners, I would call that probably a once in a lifetime view. Hmm. I mean, I guess you get to see it every day.



It's a beautiful view. We very, very lucky. Yeah. So So I've met with First Eagle over the last three decades, right? Multiple times, right? I've been to your offices, I've met with people in the field.



We've been longtime investor with First Eagle and done have done multiple due diligence meetings. And, and, you know, I've always been taken by the, the way in which you talk about your clients, the way you see your responsibility to your investors. So can you just touch on first Eagles view of the actual investors in the Fund and, and what your role is for those investors.



First Eagle has a long and hitch rich history that dates back to like 1864, which was basically the founding of the firm in Dresden, Germany, and for most of its history, the firm has been firmly on and invested its own capital. And that ethos of investing as principal not agent, to this day, still very much part of our DNA. And so all the portfolio managers, all the members of the investment team, all the members of First Eagle are heavily invested in their first gold phone. And so our interests are truly aligned with with yours. Because of that, we also understand that, you know, capital is our hot her and it's precious, and it can only be like, deploy, you know, diligently we've, you know, like an absolute return mindset, we absolute, not rochiev investors and absolute returns is what matters to us. And, you know, as long term investors, we also when we invest in a company, we expect that business to be transparent, candid, honest reverse, and we want to provide the same to our investors when we, when we engage with them, as you said, so we do not see investors as client, we consider investors as a long term, long term partners,



who basically share the same objective of resilient wealth creation with us. So I thoroughly enjoy hearing that perspective of precious capital, long term partners, participating in the fund alongside the managers and owners of the company, as well as the investors, it's a breath of fresh air, and in a world where it feels like



there's lots of quote unquote, product and sort of commoditized stories out there and, and, you know, there's there's money management, and they're sort of the business of money management. And, and so when you when you talk about money management, and you talk about the responsibility to the clients, you just mentioned, resilient, wealth creation. So the exact words were resilient wealth creation. So Can you expound on that? Can you talk about what resilient wealth creation is to you?



So what do we mean by resilient wealth creation is that we want to deliver attractive returns to our investor over time. But we also want to avoid what we call permanent impairment of capital. You know, unlike, as you said, some of our peers, we have an absolute return mindset. And we focus on downside protection. And the way we've done that, historically, is by building portfolios, you know, bottom up really one stock at a time and looking for stocks and businesses which have two important characteristics for those which are persistence and scarcity. And we think those two elements are absolutely critical to one compound value but also preserve it over time, and we only buy



into these businesses, when we find a discount to intrinsic value, that's what we call the margin of safety. And we only deploy capital when we've got that margin of safety, that gap between the price we pay and the estimated value of the asset. So we do not force capital to walk, you see cash sometimes, you know, fun, and that cash is very much the residue of the bottom up stock picking. And as you know, Jamie, because of the focus, we have on resilience on not losing money, we've got gold, you know, fun as a as a potential hedge. And so it's really about like, combining those different elements that historically we've delivered, you know, resilient wealth creation, which means, found that compounds nicely over time, but also tend to do very well in downmarket and protect your downside. So let's break that down. I mean, you you to me, you said three key things there. You said, scarcity, persistence, and margin of safety. And so you know, most of the time when I'm talking to investment managers, they talk about dividends and PE, they talk about financial metrics or benchmarking. And it's a whole different language than what you're talking about here. And so I want to break that down. So can we start with scarcity? What do you mean that a business has attributes of scarcity?



So when I when I joined First Eagle, and people were starting to talk about scarcity, I just wasn't sure what they meant. And



at the end of the day, it reminded me of you know, when I was in business school, I had the chance to like, fly to Omaha and, and meet Warren Buffett. And I remember when, when we met Warren Buffett, when other students asked, you know, that great question, which was, what is the moat? Warren Buffett talks a lot about what is the mode but he does not often, like describe it. And that day explained to us when he when he man, bye, bye mode. And the way he described it is, every time he looks at a business, he asked himself the simple question, which is, if I give the smartest man I know, which happens to be Bill Gates, you know, the chairman of Berkshire Hathaway, if he gives Bill Gates 1015 $20 billion, can you replicate that business? And that's what we mean by scarcity. We want to own assets, which are very, very, very hard to replicate. And so in that scarcity can take many forms. It can be tangible, it can be can be intangible. And so maybe let me give you a few examples, maybe starting like tangible, real assets.



Think about like premium real estate, we own that company in Japan called Mitsubishi estate. They own most of the office buildings in mannucci. In Tokyo Yamanouchi is the business district, located between the Tokyo train station on one side and the Imperial Palace and the other. There's basically no space unless you build like a new office tower in the garden of the ampro. That's impossible to replicate assets.



We own a company called warehouser that owns you know, 12 point 5 million of acres of timber in the US. It takes 40 years to grow a tree in the Pacific Northwest and 25 years in the south and as you probably know, like combat aircraft has been flat to declining over the last century because there's no new forest growing and cities are encroaching on those forests. So you know, where your house is on is 12 point 5 million acres of timber is impossible to replicate and Bill Gates will not be able to do that we own a company called like nutrien that owns potash and put Ash is the essential nutrient for all agricultural crop and potash can be found in like three very large base in which in Canada in Russian in Belarus that's an oligopoly and it's very hard to and very costly to bring new capacity of production line again, impossible to replicate tangible asset



but we also find that Scelsi T we've like intangible assets think about you know brands and great brands I'm Franch think about LVMH or or our mats you know those brands have very long great heritage unique craftsmanship and like Bill Gates good you know by bio stone if you've ever knew and start trying to sell bags but I doubt your wife would want a Bill Gates bag she'd rather have a broken bag that that's you know impossible to replicate.



Think about another you know intangible asset to replicate which is like know how expertise a company called TSMC when semies has been in the news a lot lately obviously TSMC has a unique expertise making semiconductor at the you know, if you look at like the cutting edge like three nanometers, no one can do what they do Samsung Intel, the Chinese you know are trying to replicate what they do and they simply cannot that that expertise is



is very, very hard to replicate. We own a company in Japan called FANUC. That makes industrial robots again, hard to replicate expertise and craftsmanship and know how. So plenty of example, another one would be network effects. You know, everyone thinks about Facebook or metal. But we own a company called ch Robinson, which is a truck broker that basically help people move freight and and it benefit from a network effect. Because the more trucks are part of its network, the more people willing to like move volume will join the network. And at the same time, the more volume you have, the more truckers wants to join you. And so you've got that flywheel and that scale effect that ch Robinson has as put in place. And that's very hard to replicate. So that that hard to replicate that scarcity is is something absolutely critical in the business we own and something we seek in all our investments. That is such a unique view it, you know, when you mentioned all of those companies, you just look at them completely in a different light, all of a sudden, they look so rare, right? They're there, they're just so unique in their own right, and they stand on their own and that would, you know, I guess to me, that is sort of a safe element to the portfolio. The second thing you talk about is persistence, right? So can you explain that



you want to own businesses that and you want to own businesses that persist, and you know that the process of creative destruction, the capital cycle, at the end of the day, the world of business is a pretty brutal place, you know, it's hard to last it's hard to remain relevant. And so when you find businesses, which have long operating history that build through like many cycle, I think it's very telling of the product or service they provide and the ability to adapt and change over time, and very few companies have been able to survive over centuries, and we own a few of them, we own for example, Jardine Matheson, which is listed in Singapore, it dates back from I think 1832, it was established by William Jardine and James Madison, which were basically like our pure merchants. And to this day, the business has radically changed, but the descendants are still running the business, the Keswick family still is still running the business. So they've been able to last of a century when a company in Mexico called FEMSA dates back to the early 1900. And the family will find that the business is still in charge. Think about like Unilever, which was started by the leather brothers, you know, selling soap,



you know, started in 1929. So we think all of those businesses which able to, to last through cycle and process do something very special and very special. And that's why lots of the business which tend to last, they often have, you know, very long term mindset, they tend to be family owned, they tend to like invest for the long term and a lot of the business we have in the portfolio tend to have these characteristics now Oracle, Larry Ellison, very much in charge we own a Belgian company called called Western long bear that fit under my family I behind it, we on edge che in the US that the freeze family is involved, we on Sodexo in France, that they belong family. So



we like you know those like persisting business which, which are run by by long term owners. And so that's what we meant by persistence in all of the due diligence meetings I do when I talk to and meet investment managers and talk about their processes and how they select securities. I can say that, I can't remember a time when they say that they like to invest in businesses, businesses that have lasted centuries,



that have been run by families that is is very unique. But if you in if you just stop and think about it for a minute, for a moment, that's that endurance, right, you must have learned something, you must have built something into the operations of your business, if you can endure all of the things that have happened for centuries. And and then the family, they're fully invested. Right? I mean, they're not gonna let anything happen to their baby.



You know, the same way you invest alongside us, you know, we invest alongside them. And so you know, our interests are very much aligned with them. And they're not obsessed about short term profit, but they obsess about the long term value of that franchise and the long term value of that business. And so the decision they make are very, very different compared to you know, a company where the CEO is just going to be in charge for the next five years and his goal is to maximize his option package and the profit in the next five years. And so that's where we seek we seek that like long term, business owner mindset and we tend to find it in businesses which are, you know, founders lay



The old family owned, when you put it in those words, I would love to own scarce business models that are that can't be replicated that have some sort of asset that just simply cannot be replaced,



that have endurance and persistence and have survived and have alignment of values. I would love to own those businesses. But so how do you own those as a value investor? Right, so my, my, my investment hat on me would tell me, most of those businesses are probably not offered at a reasonable price very often. Right? Yeah. And I think that's the last absolutely critical element of our investment process. We've built that library of businesses that are, you know, scarce and persistent. But we only want to deploy capital and when we only want to invest in them, when we when we've got a margin of safety, when we find a gap between the price we pay the value of those businesses between you know the price and the prospect of this company. So we spend a lot of time waiting for for that gap to open we find a lot of we spent off time just you know, patiently waiting to find that margin of safety. And so, yes, I think it only makes sense to invest in those businesses, if you if you can do it with a discount and with a margin of safety. And that's what we do. And that's why we have businesses. We've been studying for a long, long time. We've never owned, I think our master grid example. It's a company we have the utmost respect for, which you know, ticks all the boxes I mentioned, I think RMS was founded in Paris in like 1834. The descendant of the of our master still running the business to this day.



You know, incredible heritage, incredible craftsmanship. It takes, I think, close to 50 hours to build, to manufacture a Birkin bag or Kelly bag and so amazing Brian, I think the family running the business today our you know, Incredibles two out of that brand, yet, you know, we've never been able to invest in it because the price never give us a margin of safety. Right. Right. And so price is the price is your value mechanism, right? So you're looking for what it sounds like as you're looking for what appear to be extremely valuable franchises. And price makes it the value. Right, exactly. And getting it at the right price. So I can put that into a simple formula for you. If you if you have any problems, Julian remembering this formula, but I kind of wrote this down, I said r equals s plus p plus m.



Right? Resilient, wealth creation equals scarcity, plus persistence, plus margin of safety. Right? That that as wildfires fall, you know, the last 40 years, and hopefully it will keep walking for the next 40. I make it sound easy, right?



So, So, alright, let's break that down. Even more. I know, you mentioned some some names of some businesses.



I just want to make sure that we're clear that our listeners are clear on this whole different way of looking at businesses and investing capital. And as opposed to just simply buying stocks buying and trading stocks, right? We're investing capital for the long term in, in scarce persistent businesses, right? So can you give me an example of say, let's say two companies that looks similar to each other, where investors might say they're fungible, they're almost the same. But they're not where one is a scarce resource, and the other is just a commodity.



I can I can talk to you about an investment we've made fairly recently. It's a Swiss company called Schindler. So let me take you to the, you know, incredibly exciting and fascinating world of like elevators and escalators, essentially, a very, very attractive industry and elevators, as you know, are like very long duration asset the last 20 3040 years, they're critical piece of infrastructure of any building. And so



if you if you ever, you know, own a building and the elevator doesn't walk, you know, the tenants call you call you straightaway, so they play a pretty critical role in the well functioning of that building at the same time, they tend to be a pretty small cause, which means if you ever build a tower or a residential building with an elevator, you'll make sure you will go with



with a brand and a manufacturer that has a pretty long track record and so that's why you've got four big players in the world which have basically 80% shelf elevators and that's artists in the US you probably know that brand, Schindler Coney, aunties and crew.



And these guys have a pretty phenomenal business because they make money when you install the elevator but more importantly, they make money when they service and maintain those elevators for 20 3040 years, whose service contract which are very often mandatory, in part



The building code



service contract that basically like annuity stream of cash flows. And so you make money when you install it, and then you have that very nice energy stream of cash flow for the next 1020 30 years. And so companies like Otis like Schindler, this seat on millions and millions of units that pay them a service contract and maintenance contract every year, I think it says north of 2 million and Schindler's 1.6 million unit elevators in its in its contract called for is maintenance contract portfolio. And so those businesses are obviously very similar. But when you look like under the hood, what you'll see is, Schindler is the Swiss company, you know, started in 1874, the Schindler family still control their business. They've built an excellent reputation for like high quality product service quality. And because they're like Swiss engineers, they invest heavily in research and development. They invest heavily in product quality, and they really like leading the industry. Also, in terms of innovation. The balance sheet, you know, is net cash, this thing like $2 billion of net cash, you know,



fortress balance sheet, and so let's have the characteristic we like in a business. And if you like, contrast that to Otis, Otis was historically part of that industrial conglomerate called like United Technologies, and United United Technologies, treated artists as a cash cow, the goal was to have the highest margin. And as a result, they like push pricing aggressively. They under invested in the business and ultimately led to loss of market share, because the the margin were like somewhat untenable. When the business was spun out of United technology, Otis ended up with like, three times net debt to EBIT down its balance sheet, very levered balance sheet. And so when you look at like those two businesses today, on one side, we've got one which is run very much for the long term is over, invested spin off money in r&d, spin off money in, you know, quality products, and as a fortress balance sheet, another one, which probably has been like stretched too thin as a levered balance sheet, and it's probably not as resilient then. So I think, naturally, we tend to be attracted by Shinola, which, you know, fits more or investment profile. So that's, so



that's an amazing comparison, because I would think they're both the same. Right? And you could just say, well, one is cheaper than the other, you know, a typical value investor would say, these are the same businesses, one is cheaper than the other. But that's not the metric, right? The metric is, is what you've just been talking about. We, we constantly seeking, you know, companies and management team that, you know, when they have a trade off to make between the short term and the long term, they always, you know, focus on their long term, they were looking for businesses and a management team, which are willing, and seeking, you know, like short term pains, it maximize the long term value of the business, the long term value of the franchise, and it's not necessarily easy to easy to find or easy to do, you know, the family, businesses tend to tend to have those long term incentive, but must business which are run by professionals, CEOs and professional management team with much shorter incentive, they don't necessarily care about what the business looks like, 50 years from now. And so when you when you find those management team, and you find those businesses,



you know, we want to we want to own them for the for the long term. So in the in the, in the ideal of resilient wealth creation, heavy component of this is to lose less when the losing happens, right. And so we have been a long term investor here at Frontier and a previous firms with first stable global, it's been a staple in our portfolios. We've endured multiple bear markets with your firm. And, and I can attest, and anybody can see from the returns that you have performed, you know, arguably, very, very well in poor market environments. And so there's this resilient wealth creation, a big component of this is the stocks that you're bringing to the table. This is what we just summarized.



Which is an odd



way of looking at how you risk manage a portfolio that that you're actually risk managing the portfolio because the actual businesses you invest in are safer. Right? And, and,



but we all know, you manage diversified portfolio, right? Your portfolio has multiple different types of investments. And we were operating at a time where the language in the industry is is about stocks and bonds and and diversification is your risk management tool and all that and I know that that is true. But this is a whole nother element, which is that your actual businesses that you invest in are part of the risk man



management. So, so I think that's a really good summary of that. So, but in that regard, when you're managing the portfolio, you are also diversified. So how does first Eagles diversification plan work into this sort of resilient wealth creation?



Ah, you know, when you when you talked about the industry, I think there's also a bit of a fallacy nowadays around like concentrated, you know, like high conviction like best ideas portfolio because we run, as you said, fairly diversified portfolio, because we think it's an, it's very much a source of resilience. I think the argument you hear when people talk about like, high conviction, concentrated portfolio is, you know, we have a few names, we know them incredibly well, we've done a lot of work. And so we invest just behind behind the best ideas, I think what we've learned, and if you read, you know, Philip Tetlock super forecasting, if you read, there's a great book from the CIA, called psychology of intelligent analysis, you realize that as you gather, like more items of information, beyond a certain point, the only thing that increase is not necessarily your like forecasting accuracy, it's basically your confidence, there will always be uncertainty. And so at first, you know, I think we've acknowledged that overconfidence, bias, and we, you know, accept uncertainty. And so we also accept the fact that, you know, we can spend a lot of time and do a lot of work on a specific business, we will make mistakes, there's just no hit, you know, it's when we'll make we'll make a mistake. And so we spend a lot of time looking and studying great businesses and great investors, but we also spend off time studying and learning from failed businesses and fellow investors. And I think when you visit, invest, or sentry, what you'll often find is very smart, intelligent, diligent investor or that concentrated, you know, too much in a position and got it wrong. And so we, we acknowledge that, and we want to make sure no single investment, no single mistake will kill us, which is why we tend to be to be a bit more diversified than than most, I think what is also important to know, is being diversified does not mean we close it, index managers, you know, portfolio are very, very different from the index, or active share is north of 90%. And so we look like nothing like the benchmark. So we, we diversified, yet very different. We also have, at the end of the day evade or turnover, which means we own our businesses for a long, long time, and we know them extremely well. So when I think when you combine all that together, we diversified, you're different. And we're just accepting of the fact that that we will make mistake and fight that's one way of, of, you know, manage your risk and make sure we nothing, nothing kills us.



So, you are global, though, the portfolio does own securities all over the world. And when people talk about global portfolios, they often



get caught in sort of Macro Allocation discussions. Everybody wants to talk about interest rates in Europe for the dollar, or, or how monetary policy in Japan is going to affect things. And, and, you know, that's all fun to talk about. But how do you guys balance? You know, you're obviously from the passion and that you've brought to this about the individual names in the portfolio, you're obviously bottom up investors that really care about the businesses that you invest in? How do you balance location of where the business is? With the actual specific business, right? So it's, you know, this whole debate of how you balance balance top down and bottom up. And so I think last time we talked, you talked about an example and how you would view a country different than then the actual businesses you're investing in, can you touch on that?



Sure. I mean, and maybe let's let's focus on my country, you know, France, I think if you, you could, you could argue that France probably, you know, peaked,



you know, over 200 years ago, when like Napoleon Bonaparte was, you know, the Emperor and had built an empire that went from Spain, all the way to Russia. And since that day, France has been on a downward slope. And when you look at like friends today, is a country with, you know, chronically low economic growth, chronic, chronically, chronically high unemployment,



impossible to reform, lots of sovereign debt and a pretty grim like economic outlook. And these are reasons why I live very happily to move to the US. I don't think France is a very exciting place to to invite us and we wouldn't invest in lots



of domestic French businesses we would not invest in no French telecom or French utilities or French banks or French car companies. There's nothing to be excited about about you know, like French macro. But at the same time, what I find fascinating is like France is home of some of the best business we can find. Think about L'Oreal which is the global leader in cosmetics and beauty products think about LVMH which I mentioned the like luxury conglomerate, think about our mats. The most iconic luxury brand think about Pauanui car that owns Chivas, Jameson, Absolut Vodka, you know, Great Spirit brands, Aliki, you know, the leader in industrial gases, or Albus that makes our plan and he's basically kicking the butt of buying or local, small French company, which is a global leader in electrical equipment. So each of those businesses just happened to be listed in France, but they do very little business in France, actually, they just truly global champion, they've got dominant global position in their specific sector or specific industry. So that's the kind of business we're looking for. We're looking for those



global dominant champion, again, hard to replicate assets. And as long as we can buy them with a margin of safety, you know, it doesn't matter where they're listed, whether they're listed in France, in Japan, you know, Hong Kong or in New York City. Yeah, well put, because I think, I think, you know, the, the media,



a lot of investors, a lot of the hype you hear makes a lot to do about asset location, you know, where the, where the company is domiciled. And, but the company itself,



to me at least, is way more important than where it's just headquartered. Right. And so, and so well put, well stated that, you know, and the US, you know, do not have the monopoly of great business, and as much as we like the US, and it's probably the best place in the world to invest the strongest management team, we can find they are other great businesses, you know, in many parts of the world, and our job is to find them and invest in them when they trade. We have a margin of safety. Yeah, absolutely. So,



so, where we're running up against some time here, but there's, there's another important point I want to bring up about, you know, you've you've talked about being in business, for your businesses being in business for a long time, and the resilience that's built in by, by that,



you know, the age of the business and in the interest of the family, and, and how



online Mehta values, so So firstly, go global, the fund is 40 years old, so correct, over 40 years old, 43 years old, started in 1979. Yeah, and so, you've been you as if not you, in particular, but your firm has, you know, has endured and actually, you know, survived brilliantly through



multiple market environments, right. And, and so, there must be some



IP, some learn knowledge, some just intellectual property that you have, that helps you manage this portfolio, these portfolios going forward, right, having that legacy and that length of time. And



so do you want to touch on some of the, some of the sort of, yes, first of all, as a whole, based on your longevity,



the long history of the firm, you know, dating back 18, you know, since 1869, or the fund itself, which is over 40 years old, I think, an abscess in a few different ways. I think, one, it really gives us conviction that our investment philosophy, or investment process walks over time. And you know, we really understand that our investment style will not be in favor all the time. But we also convinced that if we stay true to it, if we keep buying scarce our system businesses with a margin of safety, it will walk over time and result very much in resilient wealth creation so that that conviction the true north, you know, we have it thanks to the long history of the of the firm. I think the benefit we have as well is because we've been looking after and hunting some of these businesses for four years. We've built at First Eagle a library of knowledge about this company with getting we've gotten to know them in great detail as we visited the stores the factory, you know, we've spoken to competitors we've, we've gotten to know the management team and the family behind those businesses. And I think that accumulated knowledge is incredibly valuable because always, you know, say that we named them by name



management business, we are in the judgment business. Now in the business of making money, you know, like money making judgment decisions. And so good judgment is the intersection of knowledge and conviction. And so the history gives us the accumulated knowledge and also the conviction to ask to the conviction to act. And, you know, when, when, when, when we shoot, and so it really leads hopefully, to like better judgment and better investment decision.



I think you've done an exceptional job uncovering resilient wealth creation, right, and, and how your portfolio has been able to perform



well through multiple market environments, particularly bear markets, without, you know, but while staying, you know, 80 plus percent invested in equities, and having a very different performance, pattern and characteristic than most other value funds. And so,



you know, I get, you know, I, I just think this has been really helpful for me as a due diligence person and responsible for following your firm. And I think you've really summed it up very well.



Do you have any final points that you would like to bring? Is there something anything that that I've missed here? Anything you want to emphasize?



No, I mean, thank you, I think we've touched on with touch on everything. So thank you very much for having us journey. Oh, it's been my honor. And I, you know, as I said in the opening remarks, it's been a long time coming, for me to be able to sort of dig it dig under the hood of of your global value process, and be able to do this podcast and so I greatly appreciate you being on here. It's been an honor for me, and, and,



and hopefully this was extremely helpful for our listeners.



Thank you. Thank you.



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This podcast and presentation are for informational purposes only. Frontier assumes no liability for any action taken in response to listening to this podcast. Frontier asset management is not affiliated with any specific Fund Company. The views and opinions expressed by each speaker are their own as of the date of the recording, any such views are subject to change at any time, based upon market and other conditions and frontier disclaims any responsibility to update such views