Time Stamps
00:00 Intro
00:24 Who is Barry?
06:34 Childhood and Sidle Hustle
11:30 The Utility of Money
14:30 From Trading to Long-Term Investing
22:00 Position Sizing
26:36 Human Nature and Dealing with People
34:00 Mentors
36:48 How to Keep Your Humility in Check
44:30 Avoiding Biases when Talking on X and Podcast
48:30 Constellation Software Devils Advocate
01:02:40 Fire Round
value_podcast
Hey guys, welcome to the Value Hunt podcast. And today I'm really excited to be here with Barry. He's a very experienced investor. He has more than 20 years in the industry. So let's see what we can learn from from him and stay tuned because it will be a really interesting conversation. ah So Barry, why don't you say a couple of words before we jump right into the first question.
00:01:25.89
Barry Schwartz
Thanks for having me, David. I'm excited to have a nice conversation with you and always interested to talk to younger investors and ah get their perspective. and you know we're all We're all in this together, right? Even though it's a competitive business and we all want to be the best investors, to be a great investor, we have to learn from each other and learn from the greats and share our knowledge. and you know that i'm always I always love doing podcasts. I learn from them, having conversations with people.
00:01:57.10
Barry Schwartz
and you know the best ah The best way to get become a better investor is to read, listen to podcasts, listen to blogs, you you name it.
00:02:00.76
value_podcast
Thank
00:02:05.46
Barry Schwartz
There's lots of places that are we can find out.
00:02:06.00
value_podcast
you.
00:02:08.85
Barry Schwartz
and This is a wonderful medium, the podcast. and you know that I also have a podcast called the Long-Term Investing Podcast with Baskin Wealth.
00:02:14.15
value_podcast
Yep.
00:02:16.84
Barry Schwartz
and I really enjoy doing it. it's It's a lot of fun. So I'll ahll give a quick rundown of who I am, what Baskin Wealth is all about.
00:02:24.79
value_podcast
Whoa.
00:02:26.28
Barry Schwartz
I've been in at this company for 24 years, started as a young guy right out of ah ah right out of my MBA. I didn't know what I wanted to do for a living, and but I knew that I loved investing and I had done a lot of, I grew up in, My dad really loved um baseball and numbers, and he did a lot of small cap and vesting and fooling around there. So I was a little bit always a numbers-type guy. ah When I was young, I loved um
00:02:58.73
Barry Schwartz
playing baseball and playing video games with baseball. And my favorite game was a game called Earl Weaver's Baseball.
00:03:05.88
value_podcast
.
00:03:07.25
Barry Schwartz
I can't remember the exact name, but you really had to pick and build your baseball team using statistics.
00:03:10.62
value_podcast
.
00:03:13.19
Barry Schwartz
And then you let the let the game run a simulation.
00:03:15.34
value_podcast
. .
00:03:17.35
Barry Schwartz
And I just enjoyed that aspect. ah But my foundation investing came in the dot-com era.
00:03:21.49
value_podcast
Okay.
00:03:23.08
Barry Schwartz
I was working as in a mutual fund company. not doing investing, but more doing um i guess ah you know more reconciliation, accounting-type work, first type of job. But there was a lot of time to do my own investing during the day, and ah stocks were going crazy at that time. Everybody was making money in dot-com stocks. and I participated and and and managed to turn a small amount of savings into a nice amount of savings and used it to make ah my first house purchase. I thought I was a great investor, but that was just fooling around with day-to-day stock trading. Went back to school, got an MBA, and ah you know many, many years later, here I am as a portfolio manager and chief investment officer at Baskin. At Baskin, we manage money for individual clients and families. We don't have retail funds or products. we
00:04:15.41
Barry Schwartz
create customized portfolios for our clients and build what we think is a and ah portfolio that will suit suit their retirement needs. Unlike an ah institutional investor, I don't have to beat certain benchmarks every quarter. I'm thinking long-term, and this really suits the way I invest. and Our strategy and our style at Baskin is to think and act long-term. As an owner of Baskin Wealth Management, I'm not the I'm not the only owner, but one of the owners and a large owner, I think it's made me, like Buffett said, a better investor.
00:04:48.18
Barry Schwartz
Learning about accounting, learning about operations, learning about capital allocations as an owner ah helps me get a better understanding of the day-to-day things that companies have to go through and the management teams have to go to.
00:04:48.17
value_podcast
Thank you.
00:05:03.47
Barry Schwartz
through so highly recommend that those that want to get into the investing industry hopefully one day they get an ownership of the firms that they work with and then they get a better idea of what capital allocation culture management is all about and so We're long-term investors. That's how I try and get the message across to our clients and prospects. we like And if you're going to be a long-term investor, in my opinion, you have to invest with the best management teams who have a lot of skin in the game. That means they have good ownership stakes in the companies they own and companies that think ah about culture, about how to invest those cash flows at high returns and how to allocate those cash flows in the places that treat them the best.
00:05:50.47
Barry Schwartz
ah I don't care if my company misses or beats quarterly earnings. As long as the fundamentals are moving in the right direction, I can see them. and My goal for our clients is to grow their money in equities at a double digit rate of return.
00:06:07.51
value_podcast
Okay.
00:06:07.94
Barry Schwartz
my My thought process is very basic.
00:06:11.01
value_podcast
Okay.
00:06:11.23
Barry Schwartz
The S and&P 500 tends to go up about 9% a year. The S and&P 500 is the 500 best companies in the world. there There's great investments in all around the globe. But I think no one can argue with me and that the best home for investing is the United States. The best businesses the in the world are come from the US for a number of reasons. We can get into that. But as an active active manager, my goal is to beat the S and&P 500. with our portfolio. We also have Canadian stocks too, but that's the goal. And so we're trying to buy companies that will compound our clients' rates of return at double digits, hopefully do 15% a year. Probably won't happen, but that's the goal. And so I'm looking for companies that can grow their bottoms line lines by 15% a year, double their earnings over a 5-year period,
00:07:04.30
Barry Schwartz
um or at least a total shareholder return. And if you do that, if you have that mindset, the amount of stocks that you can invest in really narrows.
00:07:15.22
value_podcast
Yeah for sure.
00:07:15.78
Barry Schwartz
You're not looking for commodity stocks. You're not looking for volatile names or small caps. um You know, it's very hard to find that. And so we tend to gravitate more towards North American large cap companies.
00:07:28.55
value_podcast
Yeah, that's that's a pretty interesting introduction. And I actually got really curious when you talked about your childhood. I hadn't planned this, but if you're comfortable with it, maybe we could we could go back to that period. And I really find it interesting, let's say the building phase of people and their careers. So ah why don't you guide us through some of the highlights of your childhood and what's really made you into what you are today and what you're doing today.
00:07:58.66
value_podcast
So you mentioned you were trading or you were not really serious about investing.
00:08:01.38
Barry Schwartz
Yeah.
00:08:03.15
value_podcast
So yeah.
00:08:03.67
Barry Schwartz
I don't think anything really stands out. I wish I, you know, I've listened to a lot of podcasts for investors where people say, you know, I bought my first stock at six or I created this business. For me, nothing really, there's nothing really exciting or stands out. I wasn't really an entrepreneurial type person. I didn't own any stocks. I think the only entrepreneurial thing I did as a young guy was I used to sell, uh, uh, peanuts and popcorn and licorice outside the Toronto Blue Jays stadium before Blue Jay games.
00:08:32.38
value_podcast
Heh
00:08:36.89
Barry Schwartz
And so that taught me a little bit about business.
00:08:37.14
value_podcast
heh.
00:08:38.77
Barry Schwartz
i Me and my friend used to drive to a wholesaler. We'd pick up a bulk of peanuts and licorice and popcorn and and candy and packages, buy them for 80 cents a package, give or take, and then sell them on the street for $2 as people went into the baseball games. And at that time, the Blue Jays, the Toronto Blue Jays, that's where I live in Toronto, were very popular. So 40, 50,000 people going to a game. And I was able to sell, I don't know, 70 to 80 bags per game.
00:09:10.46
Barry Schwartz
I learned how, where to find the best parking spots so I didn't have to pay for parking. And I would walk away sometimes with profits of 60 to a hundred dollars a game, which is pretty good for, ah you know, a guy ah finishing high school, first year university that helped pay for my university.
00:09:15.79
value_podcast
just
00:09:20.19
value_podcast
Thanks.
00:09:27.95
Barry Schwartz
But no real interest in investing to be honest with you until i started working ah after my getting my business degree i actually thought i wanted to get more into marketing i was more interested in to advertising in the marketing side. but Honestly i didn't know anything about business and i guess what piqued me was. the the trading and investing over the dot-com era. This was the era where anything dot-com, ah as soon as it went public, the stock would go straight up. And so that got me interested in it, went back to school, did an MBA that focused more on finance.
00:10:06.47
Barry Schwartz
ah Very lucky to get a job at Baskin Wealth. It was a very small company at the time, managing about $25 million. dollars My partner, David Baskin, took a chance on me. ah Funny story, David. I sent him my... You'll think this is weird, but... you know There was no email at that time. People would ah send your resumes and cover letters by fax. Do you know what a fax is?
00:10:33.73
value_podcast
Yeah, I do.
00:10:34.29
Barry Schwartz
yeah
00:10:34.49
value_podcast
I actually do. I never used it, but I do know what it is.
00:10:36.80
Barry Schwartz
Yeah. Yeah. so So there was postings. I went to a business school called the Schuler School of Business and in Toronto and David Baskin had put up posting for a research analyst. And oh I said, Oh, that sounds interesting. Looks like a good job. ah the The pay wasn't ah anything exciting, but I really wanted to get an investing and would do anything to get my feet wet. I had many, many interviews and I couldn't close any deals. I couldn't get one job, but David gave me an interview. And then he told me in the interview, you know you sent me a cover letter that was addressed to the wrong person.
00:11:12.28
Barry Schwartz
So I must have was sending out so many ah cover letters and resumes that I sent one to, you know let's say, ah you know Joe Blow Industries ah addressed it to David, whatever, but it wasn't David Baskin.
00:11:22.65
value_podcast
Yeah.
00:11:24.39
Barry Schwartz
But he still looked at my resume and said, this guy's worth at least having a conversation with. So that that's my story. ah yeah I can tell you that I didn't learn anything in business school. I can tell you that taking the CFA, i didn't really that doesn't teach you about investing. The only way to really learn investing is to listen, to get your feet wet, to do a lot of reading and and be mentored and get an idea of what type of investor you are. When everybody starts out, everybody thinks they want to make a billion dollars and
00:11:59.08
Barry Schwartz
do it by buying small caps and value and trading. But I figured ah that what that wasn't for me. That wasn't the way that I was going to be able to be an investor. And over time, I learned and from reading and and listening and being mentored that the best way to invest is to own good quality companies and hold them long term.
00:12:18.77
value_podcast
Yeah, for sure. that's That's actually an interesting story, how how you got the job by making a mistake.
00:12:24.80
Barry Schwartz
Yeah.
00:12:25.33
value_podcast
It's it's pretty funny. um And he also mentioned that you you made a ah fair bit of money during the dot-com bubble and so on. So maybe you could be a good person to teach me what's the value of money because um yeah I really enjoy the game.
00:12:42.32
Barry Schwartz
Yeah.
00:12:42.28
value_podcast
but I never bought a house or anything like that. So ah why don't you guide us through how you think about money and accumulating and like what's the value of it for you.
00:12:56.05
Barry Schwartz
Well, I think once you've achieved a level of money, it allows you to do some more fun things, maybe better traveling, buy a nicer car, ah have less worries about the future, less worries about your kids, that you can support them.
00:13:09.03
value_podcast
Thanks.
00:13:13.95
Barry Schwartz
And I think that's everybody's goal. what When I started out ah working, I thought if I made $100,000 a year, I'd be rich. I quickly found out that that doesn't cut it when you have a house, and a mortgage, and kids, and a car, and you want to go on a vacation, and you want to buy this or that. You have a spouse who also wants it. It goes very, very quickly. So ah the value of money to me is it just it just gives you some freedom and independence.
00:13:39.23
value_podcast
Yeah.
00:13:46.55
Barry Schwartz
um you know i'm i umm not I'm not in this for at at at the moment for the money. i Obviously, I like making money and ah like what it buys us and and the freedom, but I'm in it because I'm passionate about investing. And I think ultimately, whatever anybody decides to do, I think you're only going to find success if you find that passion in and that business, right whatever it is, and then the money will come. um You know, work hard, be passionate. I always tell young people that want to work in my industry or whatever industry, show the prospective employer that you you have the passion and the interest. And it doesn't matter what you take in university, whether you're going to ah be a philosophy major,
00:14:34.16
Barry Schwartz
as um and you want to get into investing, you can pivot. The world's your oyster, but you got to show, like, if you want to get into music, you want to get into investing, you want to get into engineering, whatever it is, I guess you, you know, for medicine, you probably have to get all the certifications.
00:14:48.64
value_podcast
Yeah.
00:14:49.21
Barry Schwartz
But bottom line, for most businesses, it's really about ah showing that you, you want to learn, and and you're willing to do what it takes. and ask questions and and and and be someone that's ah trustworthy. That's the most important. A lot of young people, and I was a young person at one time, they want they want everything now. But it like it's just like investing. It's delayed gratification. ah It will come if you figure out that this is what you want to do the rest of your life. The success will come.
00:15:23.25
value_podcast
Yeah, for sure. that's That's a good answer, actually. And um it it also boils down to what you optimize for, right? So if you really want to make money really quick, you go into trading or try to do other risky things that may not result and actually you may end up losing money. So ah why don't you guide us through your current strategy and how you pivoted from trading to what you do now?
00:15:52.50
Barry Schwartz
yeah so The trading that I was doing was on my own. and Of course, when I joined Baskin Wealth, that was not something that we we did. and When David set up the firm, he invested set up the firm to invest in mostly Canadian companies and ah mostly for dividends, for income, for retirees. and you know To have ah like a 60-40 portfolio, 60 percent stocks, 40 percent bonds, you that was really the strategy. ah What we learned together over the years is That can be a fine strategy. And you know if if you're looking for decent returns and safety, then there's nothing wrong with that. But what we've discovered is owning businesses that can reinvest their cash flows at high returns can allow for better results for our clients. And so that's what we're trying to achieve.
00:16:43.96
value_podcast
That's interesting.
00:16:44.24
Barry Schwartz
i miss I missed a part of your question because I was thinking ahead.
00:16:44.52
value_podcast
and
00:16:48.64
value_podcast
Yeah, no worries. ah i can I can always repeat.
00:16:49.84
Barry Schwartz
Yeah.
00:16:52.74
Barry Schwartz
yeah
00:16:52.71
value_podcast
um And I'm also like in in a bit of a sauna, so maybe I make mistakes and so on. So yeah, always interrupt when you when you miss something.
00:17:00.81
Barry Schwartz
Yeah.
00:17:02.12
value_podcast
um Yeah, but the question was actually um about your current strategy. So what what are are you looking for when you invest in a company?
00:17:06.96
Barry Schwartz
Yeah, so yeah.
00:17:11.89
Barry Schwartz
Oh, it's very simple. I'm looking to partner with the best management teams that have skin in the game that can remove best cash flows at high rates of return. um And that doesn't mean I'm only limiting myself to technology or healthcare or InfoTech. ah I'm looking for, I don't necessarily have to own the best business models. I'm happy to own business models that are in more commodity sensitive or industrial businesses as long as I can partner with management teams that know how to create value. you know A lot of investors will say, I'm a high quality investor. I don't buy banks. I don't buy financials. I don't buy airlines. I don't buy oil and gas. I don't ah you know the Look at the long-term returns in those industries. They're terrible, right? They they they destroy capital. They don't earn earn their cost of capital. they don't have Those industries don't have high ah ROEs or high return on invested capital. That's fair, and that's an average, though. and But there's always going to be the outlier.
00:18:14.30
Barry Schwartz
And so if you can find ah a wonderful oil and gas company or a wonderful industrial, you can make a lot of money there. And so our goal is to, obviously, I don't want to pay any price for a company.
00:18:21.93
value_podcast
Sorry.
00:18:27.36
Barry Schwartz
I i want to pay a reasonable valuation for a great business. And If i can't find a great business model or is evaluation i'm happy to partner with a company or management team that knows how to create value through ah maybe more in organic methods by ah smart capital allocation by ah great acquisition abilities by rolling up. sectors. So, you know, we we have a long-term investment in a trucking business and it's done incredible. Trucking is ah not a good business, but, you know, we've we've been able to buy a company called TFI International that has the ability to reinvest the cash flows at high returns and really know ah great financial engineering and, you know, knows when to
00:19:16.29
Barry Schwartz
increased dividends, knows when to buy back stock, knows when to issue more stock. ah But ultimately, management is what matters over the very, very long term. Those that can navigate ah and think long term, navigate temporary issues and come out the other side even better is what I'm looking for. And ideally, I like to get into those positions when those stocks have a temporary issue, maybe they miss earnings, maybe someone's worried about the sector, God knows that provides us the opportunity. And then David, don't sell. We like to hold on for a very long period of time, even in a cyclical industry, ah because I'm never going to be able to pick the tops and the bottoms of the cycle.
00:20:01.63
Barry Schwartz
so Even in this trucking business, which is cyclical, trucking is all spot pricing.
00:20:02.48
value_podcast
There.
00:20:06.77
Barry Schwartz
and spot pricing That means the day-to-day pricing can be great when the demand is there and then go to heck when it isn't. and I'm not going to be able to figure it out. and Sometimes, stocks will hit all-time highs even when the industry is underperforming because the market is pricing in better results in the future. um So that's what I'm looking for. And i I've found that it's probably best to stick with the leader in the industry. I used to think, okay, ah you can buy Costco at
00:20:41.95
Barry Schwartz
30 times earnings and it's probably expensive or you can buy maybe a a grocery chain at 10 times earnings and if the valuation goes up, you'll make money there. that I found that's not the way to invest or I can buy the second best or third best company in the industry because it has a cheaper valuation. That doesn't work for a long-term investor.
00:20:59.71
value_podcast
Mm hmm.
00:21:01.67
Barry Schwartz
You may get a short-term pop, but then it usually falls back ah Usually a company remains undervalued or cheap for a good reason. And usually a company remains overvalued and expensive for a long period of time, also for a good reason. And I'm okay with a company being extremely overvalued as long as I bought it a long time ago at a cheap valuation. And then maybe I can trim back some of the positions for our clients. and And that's the way we think about it. um you know Costco, great example right now. The stock has done incredible. ah We started buying it during the pandemic at around $300 a share. You saw it's probably now close to $900 a share. So you know that's ah three times our money ah in a very short period of time. Everybody's arguing it's so expensive. How can you buy it? You're crazy.
00:21:55.50
Barry Schwartz
Well, maybe I won't make great money over the next five years. But who says five years is ah my whole period? Maybe my whole period is 20 years, 30 years, 40 years.
00:22:01.93
value_podcast
Yeah.
00:22:04.90
Barry Schwartz
Hopefully I live that long. And all I can tell you is I feel quite confident that Costco will open 30 plus stores a year for a very long period of time. And I really don't see a lot of competition. If things change, then I'll have to reassess. But I still feel comfortable owning that business. Is it my best idea to $850 or $900 a share? Probably not. But it could still mean that it that does mean we're not going to have great rewards for our clients and myself going forward. And so just to finish off, um everything that I buy for our clients, I buy personally.
00:22:34.85
value_podcast
Yeah. Yes, sir.
00:22:40.43
Barry Schwartz
like I don't want to ever own have a client own a stock that I don't own. So we we buy 30 to 35 North American stocks, mostly US, and i I and my family are the largest owners of those stocks among our client base, until one day I get a very, very large client that maybe they'll own more than me, but that's ah that's how we invest.
00:23:03.86
value_podcast
Yeah, you you just read my mind because I was about to ask you about to two concepts that you briefly touched upon, which are um incentives. Obviously, you're aligned um because you own the businesses you are investing in for your clients, ah but also the number of positions or position sizing, whatever you want to call it.
00:23:25.76
Barry Schwartz
Mm hmm.
00:23:26.62
value_podcast
so ah when you When you say Costco is maybe not your best idea, do you do you play with the like the weight of that position your in your portfolios or do you maintain like a a fixed weight for each position? So how do you think about position sizing and really ah like not diluting returns because when you have 35 to 40 stocks, Uh, even if your best idea is like a hundred beggar it's like 2% of the portfolio and so on so like what's uh, how do you think about that?
00:24:03.50
Barry Schwartz
Yeah, well, so we try to limit the, and if a new client walked into our, try and limit the positions to about 30 to 33. Some of them I call them, some some of our positions that we own are spinoffs of existing names, like we own three different Brookfields because Brookfield keeps spinning off and they don't want to sell, and or constellations spinning off topicus.
00:24:19.57
value_podcast
Yeah yeah
00:24:25.01
Barry Schwartz
So it depends how you view it.
00:24:25.28
value_podcast
Yes.
00:24:27.10
Barry Schwartz
ah We feel that's the right number for us. I know that some people, I'm not a fund. but I'm not a managing institutions. I'm managing real people's money. and And if you're going to do that, I think you need to protect capital preservation is highly important. I'm managing people's retirement and and chances are man managing all their investable wealth. And that's how I think about it when we invest. Even if I'm managing only a portion of your overall portfolio, I still view ah view it as if I'm managing the entire of you entirety of your wealth, just like Buffett.
00:25:03.56
value_podcast
Yes.
00:25:04.51
Barry Schwartz
You know, Buffett says that he views his shareholders in Berkshire as partners. And he runs Berkshire to not lose money for his partners, right? Rule number one, don't don't lose money. Rule number two, don't forget rule number one. Losing money doesn't mean making bad investments and stocks going down. It means so overall ah margin of safety, not overpaying. you know doing the right things, thinking long-term. So really, that's that to us, that's how we think about billing a portfolio. We we position size about 3% starting allocation to an equity. And once again, like I'm not a fund, so my goal isn't to beat, ah you know, a specific benchmark or what have you.
00:25:50.76
Barry Schwartz
It's to grow capital in ah and a really a nice way. And so we tend to trim back positions when they get eight to 10% weights of an individual stock.
00:25:58.35
value_podcast
Thanks.
00:26:02.02
Barry Schwartz
So if I'm so lucky to buy Costco and it becomes an 8% weighting, I'll trim it back and reinvest some proceeds back into maybe names that I think have better upside results. But I'm not going to sell Costco. I'm not going to take pay that capital gain. And I'm not going to play that game of getting in and out of stocks and BSing my clients that I know what the exact intrinsic value of that company is at any point in time. None of us know that. So you know we we want to be a little more, um less precise and more focused on the long term. So you're absolutely right. ah you know If you buy a very small allocation and it doubles, it's meaningless.
00:26:44.79
Barry Schwartz
But it's still someone's money. right and so A lot of us think in percentages, but you're dealing with people's real money, their portfolios, $1 million, $2 million, $10 million, $20 million.
00:26:46.98
value_podcast
Right.
00:26:49.99
value_podcast
Right.
00:26:56.68
Barry Schwartz
dollars That's important to them, not the percentages. And so you've got to protect them and diversify their assets. You want to get filthy rich, buy one or two or three stocks. Uh, this Baskin wealth isn't the place to come to, to get a filthy rich or lose all your money. And so my clients, like I said, we manage the entirety of their wealth, their doctors, lawyers, entrepreneurs, business owners, uh, you know, people that inherit a lot of money and the pain of losing money is outweighs the gain of them making money. If you follow what I'm saying.
00:27:31.76
value_podcast
For sure, for sure. That's like actually a psychological thing. ah So um my next question touches upon ah what you just mentioned, which is actually human nature. And what have you, sorry, what have you learned about dealing with people by managing their money?
00:27:46.02
Barry Schwartz
yeah Yeah.
00:27:51.26
value_podcast
ah Because it seems like a pretty important thing in your in your current position.
00:27:51.41
Barry Schwartz
one
00:27:56.71
Barry Schwartz
I think that's a great question. I think, well, first of all, you have to learn from yourself and your reactions. Keep in mind, I've been doing this for 24 years, and I've lived through a lot of crazy stuff.
00:28:05.89
value_podcast
Mm.
00:28:06.71
Barry Schwartz
A pandemic, high inflation, wars, ah great financial crisis, the dot com bubble bursting recessions. And so I learned what works for me is, you know, owning the best businesses, I find protection in that. But from from a psychology standpoint, what works for me is, you know, try not to look at stock prices too often. Try to do a lot of reading and research on the weekend when the market is closed, I find I'm more calm. Let's say we have a really bad week. and all my stocks missed earnings, and they're all down, and blah, blah, blah. And I feel really bad about myself. Then I spend a weekend reading research reports and thinking, OK, well, what's Google going to earn in the next three to five years?
00:28:55.01
Barry Schwartz
And how much money could we make if this and happens? And I start feeling better about those kinds of things. So i it's not healthy for me or my clients to check their stock prices every five seconds. It's a mood enhancing drug. When you're making money, you think you're you only going to keep making it. When you lose money, you think it's the end of the world. But what I've i've learned is ah to be a successful portfolio manager in this business and ah hopefully um I can stick it out for a longer period of time than I've been 24 years is you've got to be zen about investing and you can't let um anything ah get you off target.
00:29:33.97
value_podcast
Mm hmm.
00:29:34.84
Barry Schwartz
You can't let the macro, the micro, the clients, the everybody, you know the what is the Buffett saying? He stands up to the plate and says, swing you bum. right Everybody is telling you to do something different.
00:29:49.74
value_podcast
Yeah.
00:29:50.21
Barry Schwartz
I'll get a call from clients saying, I'm worried that Donald Trump's going to be president, and how do I Trump-proof my portfolio? And then the next call will be, I'm worried that Trump won't win presidency, and how do we what do we do there? so There's always something to worry about. You're never going to get it right. And so for our temperament, i have I can't be panicking when clients are panicking. I have to all constantly remain optimistic and bullish, even if i'm and but it's healthy to be pessimistic at the same time. And that really works for me and you know gets me excited when I wake up.
00:30:27.29
Barry Schwartz
i you know the You don't know what's gonna happen next your company can miss earnings the stock go down 10% and then three weeks later It's at an all-time high and nothing has changed and so the day-to-day prices tell you nothing they tell you zero they just tell you what someone is willing to buy your stock from you at at that point in time and tomorrow they can change their minds, so
00:30:38.20
value_podcast
Yeah.
00:30:51.81
Barry Schwartz
I think all of these things work together to become a better long-term investor, and that's what I want to achieve. I don't want to sell. I don't want the macro or the micro to and influence influence us. I want to really focus on what matters is you know earnings growth, the current level of interest rates, the level of inflation, the outlook for the GDP in the countries we invest in. and and investing in countries and where I'm comfortable about the rule of law, accounting, and you know how how and and the friendly shareholder allocation, capital allocation.
00:31:26.04
value_podcast
Yeah, that's ah that's a great answer. And ah at the end of the day, we we all know the theory about be rational and stoic and so on. But I feel like you can only learn that by actually doing. And yeah, if you can learn from people like you, it's it's awesome.
00:31:40.19
Barry Schwartz
Yeah.
00:31:43.57
Barry Schwartz
Yeah, ah but but i'm but i'm not i'm not I'm human.
00:31:43.95
value_podcast
Well, thank you.
00:31:46.71
Barry Schwartz
And i've just like anybody else, I've had dark days in the markets and I've lived through very dark and depressing times. I can tell you 2008, 2009 was horrific. The pandemic, 2022 more recently was very tough.
00:32:01.30
value_podcast
Okay.
00:32:03.91
Barry Schwartz
you know We had some holdings in our portfolios that went down 50, 60, 70%. Netflix went down 70%. It hit $700 at the top. and twenty one It hit 180 bucks in 2022. It's back up to 640. How do you live through that? And I made those mistakes too. I've sold things because all the bad news was piling up. Everybody's talking about it on Twitter or X or whatever you want to call it. Everybody's calling you. You're an idiot.
00:32:34.13
Barry Schwartz
Why are you holding this? And then you give in. And then, yeah, you are the idiot because you gave in. Trust your process.
00:32:40.24
value_podcast
right yeah definitely uh i remember that that netflix when it hit it hit like 180 i actually made the dumbest mistake of my life ah which is i bought like a lot for my pay paper account
00:32:41.69
Barry Schwartz
That's the most important.
00:32:49.79
Barry Schwartz
Yeah.
00:32:59.18
Barry Schwartz
Yeah.
00:32:59.92
value_podcast
So I'm up like 200 and something percent. So in Investopedia, wherever I'm like beating everyone. But yeah, at the time I wasn't comfortable enough to actually invest real money. So I was just ah I was a dollar cost average in the S&P, but ah not individual businesses. ah So yeah, if I had bought that, it would be awesome.
00:33:19.00
Barry Schwartz
you know
00:33:22.52
value_podcast
But maybe next time.
00:33:23.84
Barry Schwartz
Yeah. yeah so we yeah and We had clients who wanted us to sell because when everybody's hearing the same thing, it's already priced in.
00:33:35.37
value_podcast
Right.
00:33:37.10
Barry Schwartz
No one calls me with new information, with a worry.
00:33:39.20
value_podcast
Mm hmm.
00:33:41.36
Barry Schwartz
I read that Netflix is losing subscribers and it's over. Well, thank you. Everybody already knows that. It's already been reflected in the stock price. ah The market is not dumb. It beats the crap out of companies that report and have bad outlooks in the short term it and it prices it in. And it generally overreacts on the downside as well as the upside, but I find it more overreacts on the downside. So that's my takeaway is you got to trust your pros. I think Netflix is an inevitable company. I think at some point it's going to be a $1 trillion dollar market cap company.
00:34:17.40
Barry Schwartz
it's going to be the world leader in broadcasting and streaming all entertainment movies tv shows local sports local news you name it uh i don't think it's too late to be into that stock if you have a long-term mindset i think uh you know i'm very excited to own it for very i think spotify same kind of thing it's going to be a a huge long-term winner. so i want to think I had enough about thinking in one-year increments or two-year increments or five years. I hope I have the latitude from clients that we can think in 10 and 20-year increments ah or even longer. um Although things change so quiet quickly, who knows what the future will bring. But you know that's that's that's how I want to ah grow my wealth and my client's wealth, is and that's the only way I know how.
00:35:05.78
value_podcast
Yeah, that's that's pretty amazing. And one thing that I find really useful is to actually listen to your mentors and and listen to what they are saying and the experience they had. So why don't you share with us ah the people that are mentors to you and people that you are admire in the investing world and what you'll do from them.
00:35:25.59
Barry Schwartz
Well, that's great. So of course, my my business partner, David Baskin, who took me on and took a chance on me. And he taught me a lot about how to treat clients, you know, because I also wear another hat. I'm chief investment officer, but I'm also a portfolio manager. And I have a book of clients that I speak with, and I manage their portfolios.
00:35:43.88
value_podcast
Right.
00:35:46.71
Barry Schwartz
And I'm ah relationship manager with them. So ah he's and ah he's a very articulate guy. He is well-learned in a lot of different fields. You'll never beat him in trivia. He's an extremely so well-read, smart person. And what I learned from him is ah you know how to think and act independently. And you know that was that was our first mentor. My other mentors are really just the the fund managers and investors that I like and I can learn from. Of course, Warren Buffett and Charlie Munger. Of course, ah you know Ron Barron and Bill Miller and Phil Fisher. Those are the people that I admire most. and Then I learned from young people. We have a head of research here. His name is Ernest Wong. ah you know I learned from him. He does all the grunt work. He does all the day-to-day research for our companies.
00:36:43.29
Barry Schwartz
I don't have the abilities to do that anymore. ah you know as As you get older, and you're ah you're pushed and pulled in different directions, and my skills are not ah the day-to-day learnings of the companies. I'm more of a generalized and general person, whereas he he can get more specific and detailed. And so I learned from him. So you got to be open. I think a lot of people fall into a trap of, this is what I know, this is how I do things, and I play golf four times a week, and this is how I invest for people.
00:37:19.09
Barry Schwartz
I don't want to do that. I don't want to fall in a trap that kind of trap as I get older. I want to be open and learn new things. This is the way that I like to invest today, and we think makes sense. I could change in the future. and so you know I don't want to be ah strict and to one sector, and I want to keep an open mind. Years ago, I said I would never invest in oil and gas, and now we hear we are owning two oil and gas companies. so ah you know We'll speak in 5 years and see if that's where we worked out well for our clients.
00:37:45.16
value_podcast
yeah yeah that's that's pretty that's pretty interesting and requires a certain intellectual humility i would say so uh yeah
00:37:58.27
Barry Schwartz
Oh, you got to be humble in this business because you're a genius that one day and a more on the next. And when you're more on your clients, let you know and every everybody on Twitter lets you know. And when you're a genius, no one lets you know, but you you you feel really good. So no, this is the most humbling business in the world because you the scorecard is published all day long from 930 to 4pm on trading days right and in North America. So you know if you're any good.
00:38:26.53
value_podcast
Yeah, for sure. so ah Other than than like actually remember recalling your mistakes and listening to the listening to the feedback that your clients and people on X give you, what practical strategies do you use to stay humble and yeah just be ah ready to learn and from your mistakes and so on?
00:38:51.72
Barry Schwartz
Well, that's mistakes. I don't call any of them mistakes. They're just lessons that you can learn and from and apply later and hopefully create some pattern recognition. You know, we're all going to make mistakes in investing. We're all going to think that's, that investment is amazing. And then it turns out to be garbage. ah Things can happen that are beyond your control. you know Regulations change, governments change, competition comes out of nowhere that you just couldn't see coming. it's just It's very hard. So I think every mistake that you make in investing hopefully forces you to become a better investor and and own better businesses and and not make those mistakes again. And so that's important to me.
00:39:35.36
Barry Schwartz
you know, I've sold things at the bottom. So I'm trying, and I now know why I sold those things at the bottom and try not to make that mistake again. or i Or I bought something that had no growth, but I was excited about the valuation or the share buybacks. I now learn not to make that mistake again. And so ah you just yeah just apply all those lessons. ah you know And of course, the biggest mistake I think in one I've made is A, oh, that stock's too expensive. I'm going to wait for a pullback or just not for me. And of course, it just goes higher. Or or B, oh, that stock's done nothing for five years. I've given it five years.
00:40:17.34
Barry Schwartz
and Get out." And then, of course, it doubles, right? That happens all the time. So ah I'm going to let fundamentals of the business be my guide. I'm going to let patience be our guide. and And those are the lessons I think are timeless for for any long-term investor. I'm not saying this is the only way you can invest. It's just the way that I like to do it, and I don't want to sell. And if I if i take a position and have the process where I'm never going to sell, Not to say I won't sell, but if I take that thought process, ah it really it really can be eye-opening and life-changing in terms of how you can be an investor.
00:40:54.58
Barry Schwartz
I went for a walk with a friend, and we talked about Microsoft. He said he bought Microsoft at $400 and sold it at $430 in a few weeks, and he was really happy with that.
00:41:00.86
value_podcast
Mm
00:41:06.59
Barry Schwartz
I'm like, dude, I bought Microsoft for myself 13 years ago at $25. I haven't sold a share. And he said to me, he said, you hold stocks that long, Barry? And I said, yes. ah why well There was no compelling reason ever just so for us to sell Microsoft, never once. We've trimmed it a few times for our clients, because it gets big in a portfolio.
00:41:27.14
value_podcast
-hmm
00:41:28.83
Barry Schwartz
But if the fundamentals are growing, and I can see that double digit potential return over the long term, um just sit on your butt.
00:41:39.41
value_podcast
right right for sure ah what what about the keeping your humility in check part because that's also really helpful okay okay that's a that's a great ah
00:41:48.55
Barry Schwartz
um The market will do it for you. Yeah, the market will keep... ah So right now um we're feeling really good. We had a great 23, a great 24. Something will happen that will bring me back down to earth and remind me again that you know I'm just ah another investor subject to the market whims. So like I said, I'm just trying to be a zen about it. Try not to get too excited when things are good. Try not to... you know One of the things that can happen when markets are going really well and your stocks are growing really well is you can say, okay, time to do this and that. But then what are you doing?
00:42:29.92
Barry Schwartz
youre I don't think selling a great business to buy a mediocre business at an at a better valuation is something that's going to work out for me, and then pay tax, and then ah when do I get out of that mediocre company?
00:42:34.84
value_podcast
. . .
00:42:43.17
Barry Schwartz
So I'm just going to have to suffer through the pain of the next drop and with hopes that over the long term, the I get bailed out by the quality of the business. That was one of the mistakes though that I made with Meta. didn't understand that how good the um Instagram and Facebook business was, that it didn't matter if ah Zuckerberg was lighting money on fire with investing in the metaverse.
00:43:14.11
Barry Schwartz
Who cares? ah That was a short term issue. And the bit the quality of the overall business is so good that it's going to overwhelm any mistakes or losses that they make have in other parts of the business.
00:43:24.44
value_podcast
Thank
00:43:25.47
Barry Schwartz
That turned out to be true.
00:43:27.65
value_podcast
All right.
00:43:27.97
Barry Schwartz
Yeah.
00:43:28.32
value_podcast
Yeah, for sure. So that's a great answer. And and it reminds me of ah the answer of a famous investor, which I won't mention just because it was private. But he said, like, oh, my my wife does that for me. So it's.
00:43:43.23
Barry Schwartz
Oh, your my wife reminds you of the humility? Yeah. Yeah. yeah you're yeah you' So your kids, your wife, your family, ah they just they just know you as as David or Barry, right?
00:43:47.57
value_podcast
so
00:43:55.92
Barry Schwartz
They just know you.
00:43:56.69
value_podcast
Yeah.
00:43:57.53
Barry Schwartz
they ah and And yeah, you quickly realize that you're nothing special. um And that's, that's the right way to live is, um you know, we're all human, we all have our challenges and struggles that we go through. And success, I don't, success isn't measured measured by how much you have in your bank account or how much AUM you're managing. Success is, in my opinion, is ah You know the how you how happy you are with the You know everything you're doing in life your family your health your your business the people you surround yourself with That's where you get that's where you get the quality of of life not. Oh my god. I'm such a great investor Everybody loves me because remember it's the love you today and hate you tomorrow that they turn right quickly You can see all the people that they loved you Now, Cathie Wood, they loved her. Now, ah they just ah think she's ah you know she's an incinerator of money, and maybe they'll love her again. right so better not to be such a ah you know I don't want to be a marketing firm to be a marketing machine. I'm not interested in
00:45:09.59
Barry Schwartz
you know obviously we'd love to grow, but I'm not interested in launching retail products and doing this and that and ah trying to bring in the most assets and and everybody thinking we're the greatest. you know I'm ah so happy that a number of families have ah you know trusted us with their their their money and it's a big responsibility and I don't want to let them down.
00:45:27.48
value_podcast
Thank you.
00:45:33.91
value_podcast
Right. Yeah. Perfect. That's it's really that's really nice. And like how do you avoid the common pitfalls of talking publicly about investing and your positions on X and your podcasts and stuff like that? And maybe also you could paint a picture of, on the other hand, what you learned from ah being exposed to the public.
00:45:56.81
Barry Schwartz
Yeah, I don't have a problem with it, clearly. i i um I'm very happy and open to talk about our positions and things that have gone right and gone wrong. um And I'll tell you why, because I have the confidence in this type of strategy that it's going to work out very well over the long term. And so I have i have no issues talking about stocks, and I'm allowed to change my mind at any time. And you know my my allegiance isn't too My followers on Twitter, or my podcast is to our clients and I'm gonna do what's best. We're gonna do what's best for them and and their portfolios at all times. And I'm ah i'm a fiduciary, I'm a CFA, I'm a portfolio manager. My duty is to the clients and to do what's right for them at all times and always think of them first before myself and my firm. And so that's the approach that we take
00:46:56.39
value_podcast
Yeah, ah yeah, yeah, because you always listen like never disclose your positions because you might bias might might creep in and stuff like that. So um yeah, it's it's always interesting to balance the upside of um being exposed to the public, which is always good because you get feedback and you can I don't know just get your ideas tested.
00:47:08.75
Barry Schwartz
Yeah.
00:47:21.17
value_podcast
But on the other hand, you have the biases and and stuff like that.
00:47:21.93
Barry Schwartz
Yeah.
00:47:25.25
value_podcast
So
00:47:26.00
Barry Schwartz
Yeah, no it's ah I don't think there's any right answer. I think the right answer is do you have to do what you think is right for your yourself and your business and your comfort level. I know lots of smart people that won't go on TV, won't do podcasts. ah You know, they that doesn't suit them. um I like to share ideas and share what we're thinking. I think it makes our clients more informed. This is all for my clients, by the way.
00:47:57.26
Barry Schwartz
ah You know, whether they listen to this or not, I want them to get a, to really buy into the and understand and me to articulate the message of how we invest.
00:47:58.83
value_podcast
Um
00:48:07.96
Barry Schwartz
And so I think the best way to do that is through podcasts, through blogs, through our website, through being on TV, I think, ah you know, it gives ah clients and even prospects had a good idea of this is how we do it, this is why we think it works. This is why we're going to keep doing this going forward. And if it resonates with people, that's wonderful.
00:48:27.43
value_podcast
hmm.
00:48:28.12
Barry Schwartz
If people think it doesn't resonate with them, that's fine. They don't need to invest with us. ah you know i I know this strategy works. I know this is the right approach to invest. And because I've bought into it 100%, and Ernest has bought into it 100%, the clients know that we're completely aligned ah with, and because I'm buying the exact same stocks and owning them with them, ah i'm I'm fine disclosing and talking about our positions. you know We don't disclose every single name, although people can probably figure out most of them. ah We have to file what's called a 13F once a quarter,
00:49:08.95
value_podcast
Mmhmm.
00:49:09.02
Barry Schwartz
because we own over a hundred million dollars us of or more than $100 million dollars of US securities. We're just publishing our 13F probably today or tomorrow you know for the second quarter ended of 2024. But that doesn't show all the Canadian positions. But ah you know it i'm I'm cool with it, subject to change in the future.
00:49:34.27
value_podcast
Right. Yeah, for sure. It's always good to leave a margin for change because, yeah, it's you have, as I said before, the biases and stuff.
00:49:43.86
Barry Schwartz
Uh-huh.
00:49:44.19
value_podcast
So ah maybe if you're comfortable with it, we could jump into one name that I know you own. And I've done a lot of research. Actually, my mentor works or used to work at one of its subsidiaries, which is Constellation Software.
00:49:59.87
Barry Schwartz
Yeah.
00:50:00.16
value_podcast
and yeah so I have a couple a couple of questions maybe I'll play a bit devil's advocate I don't know if you are fine with it but um I would like you to comment on the fact that yeah obviously constellation has to deploy more and more capital and keeping the rates that they they used to to have will be harder and and and harder over time so um yeah how how do you think about that?
00:50:08.25
Barry Schwartz
Yeah.
00:50:26.64
Barry Schwartz
agree I agree with all that, by the way. I agree with all that. Yeah, sorry, but I cut you off. Yeah.
00:50:31.67
value_podcast
no No worries. ah It's just like maybe you could share your thoughts and then I'll ask you a couple more questions.
00:50:36.92
Barry Schwartz
yeah
00:50:37.90
value_podcast
yeah
00:50:38.46
Barry Schwartz
Yeah, no I agree. No one should be buying Constellation software today thinking they're going to compound their capital 35% a year going forward. That was an amazing point in time. The stock has gone up and to the right for a long period of time. I'm lucky that Ernest and I put some research into it. and Six or seven years ago, we started buying it at $1,000 a share. And we're very happy ah with it. And we never expected to make four times our money that quickly on the stock. And I never ah don't expect that that that will happen going forward. That being said, I think we can still do well ah with Constellation Software. And I still think it can can compound our client's capital and my capital at double digit rates for a high long period of time to come.
00:51:26.02
Barry Schwartz
I think they're now up to about 1,000 software companies. The last a meeting that we had, we attended, ah the CFO Jamal said, ah there's at least 40,000 companies that to constellations could acquire. and that was and and and He said that in 2015 or 2016. A few years ago, he said, you can bet that there's many multiples of that now, right given how the world has changed. so i don't think there's ah I don't think there's a problem with how much how many companies that it can acquire.
00:51:54.90
value_podcast
Yep.
00:52:00.58
Barry Schwartz
and I think they've discovered, ah David, there's a new way of that ah to unlock ah value by ah buying pieces of companies that um are underperforming and looking to spin them off. right so you know the The last few acquisitions, a couple of healthcare software companies are have been from publicly traded companies, where they're either forced to divest because of some regulatory, or it's an underperforming asset, or what have you. And so there's lots of ways there for it to create value. I think another way that they've unlocked value is by doing these spinoffs, right by Topicus and Lumen, by allowing founders of
00:52:43.94
Barry Schwartz
public of ah of companies of larger software companies to receive stock in a new entity and defer the capital gains because consolation when it makes an acquisition today usually only pays cash it's not issuing stock and that doesn't work for everybody not everybody wants the cash they want they don't want to pay the capital gain
00:52:57.70
value_podcast
Mm hmm.
00:53:03.01
Barry Schwartz
And especially in Canada, capital gains tax rates have gone up, probably US that will go up too. And so it's going to be ah people would rather have um ah maybe shares in a new entity ah versus private equity, their competitors who will offer may not be able to pay always cash or want to sell them shares at a new entity that they may not want or roll up that um software into another software and blah, blah, blah. So I still think Constellation has the advantage over all its competitors. And I think they're what what's misunderstood about Constellation is they're actually quite good operators.
00:53:40.42
Barry Schwartz
ah They come in and they fix up your company ah Now they don't buy the best companies in the world They buy mediocre companies that have probably GDP like organic growth or less ah but then try and do what they can to improve the cost structure and Improve the operations and those are the things that no one discusses because we really don't know But when you talk to people that have worked for companies that consolation acquires you find out that they sometimes can be quite ruthless ah so Yeah
00:54:08.69
value_podcast
Yeah, for sure.
00:54:10.38
Barry Schwartz
ah So i think that I think that for the next five to 10 years, Constellation will have no trouble ah allocating lots of capital. And then I think you're going to be looking at Constellation 2.0 or 3.0. Constellation 2.0 is really the spinoff of all of its ah vertical units, right? The hospitality one, the the transportation one, like there's, I don't know how many vertical business units it has a lot, but there's a potential to spin off all of them over time and really use those as vehicles to get growth from a smaller standpoint, right? ah You know, a smaller entity like Ellumen making a 3 million or $5 million dollars acquisition is beneficial to the bottom line versus consolation buying a 3 or $5 million dollars revenue company.
00:55:02.31
Barry Schwartz
ah then Constellation 3.0 is really the company looking to um
00:55:03.05
value_podcast
For sure.
00:55:09.45
Barry Schwartz
probably make acquisitions in other areas of aside from software. ah Learning from companies like Transdime or other high-performing conglomerates so like Ingersoll, Rand, or whomever, ah there could be room for Constellation to make large acquisitions there. And then I think the final stage of Constellation software is really the return of capital. eventually making aggressive share buybacks. and so ah i think i think I think it's going to be the most exciting company to own for a very long period of time, and you'll see it go through different stages. but Hopefully, I'll be around long enough to to see it, but that's what I think is going to happen, is you're going to see this company evolve. I think you're going to see it
00:55:58.37
Barry Schwartz
grow massively and then start to shrink by using financial engineering and spin-offs and share buybacks. And there's lots of examples of companies that have bought back an enormous amount of ah shares over a long period of time, and you just made a fortune even though there's next to no organic growth.
00:56:12.65
value_podcast
Okay, thank you.
00:56:19.76
Barry Schwartz
ah So we'll see what happens.
00:56:19.77
value_podcast
Right.
00:56:23.25
Barry Schwartz
But I trust the management team that ah you know they have all the elements that I'm looking for when i investing. Culture, incentives, ah targets to invest capital at high returns, ah you know all the ah great operations, skin in the game, all these things, it fits all the boxes. ah Valuation today, of course, iss not it's not a bargain. The market has figured out the winners and the losers, but that doesn't tell you anything about how much money you can make going forward. and I'm certain it will become it and all of its spinoffs will become the one of the largest stocks on the Toronto Stock Exchange at some point in time.
00:57:07.87
value_podcast
Yeah, hopefully, because they they really deserve it. It's really an admirable company. and And you mentioned about the next and following growth stages and mutations. But if you look back, they are really already mutated a lot. So if you look at constellations, I don't know, in the 2000s or something like that, it was so different.
00:57:22.49
Barry Schwartz
Yes.
00:57:28.58
value_podcast
And ah therefore, we can only expect that it will be different in the future, too. um
00:57:35.38
Barry Schwartz
ah ah and and And that's what they think about. They're always thinking about ways to improve, um you know, the business and and have, you know, a lifetime of of ah of ah ah longevity for their shareholders, ah not just in the current incarnation. So, ah you know, they're deep thinkers there and but let's hopefully we'll enjoy the ride for a very long period of time.
00:58:02.45
value_podcast
Yeah, hopefully so. um ah the following come ah ah The following event or I think that I want you to comment on is actually ah how Mark Miller and Mark Leonard sold some of their shares ah in the because of the ah capital gains tax in Canada. What do you think about that and why would they sell ah the shares? like Isn't it sort of a short-term movement?
00:58:34.69
Barry Schwartz
you you got you know None of us are going to live forever. At some point, you got to sell your shares or a trim back.
00:58:38.79
value_podcast
That's right.
00:58:41.21
Barry Schwartz
and i think that's ah okay i you know I'm an owner here at Baskin Wealth Management and I've sold some shares. right Even though I think I have a great business and it's gonna grow even better, you know you sometimes have to diversify your assets. Sometimes you have to cover for taxes. Sometimes you may wanna buy a beautiful beach house. Who knows but ah who knows what they wanna do with their money? That's their decision. They haven't told us nor do they need to.
00:59:08.78
value_podcast
Okay.
00:59:10.45
Barry Schwartz
um you know mark What I'll tell you is Mark Miller and Mark Leonard are extremely wealthy guys. All right? And they have other investments. And they're yet they here they are still owning unbelievable, ungodly stakes in consolation software. All right? It's whether Mark Leonard ah goes from an owner of $4 billion shares to a billion. He's still got $1 billion dollars in one stock. And guess what?
00:59:38.13
value_podcast
just
00:59:38.40
Barry Schwartz
All you commentators on Twitter, you don't have $1 billion dollars in a stock. So what are you talking about?
00:59:42.62
value_podcast
Yeah.
00:59:43.12
Barry Schwartz
And what are you getting so upset about? like I don't give two poops that someone that ah a CEO who owns an unbelievable amount of stock sells some. Fine. there you know jeff Jeff Bezos is selling stock or Zuckerberg is selling stock. My God. Take a step back. they they've got yeah Bezos has like $40 billion dollars in Amazon. Wouldn't you sell some too? right yeah so i don't care what the reasons are that doesn't bother me i don't care what made up reason i think it's just the right thing to do ah yeah you know no They have families, they have wives, they have husbands.
01:00:13.97
value_podcast
ah
01:00:27.35
Barry Schwartz
They'll get pressure from a lot of people. They're tax planners, accountants. You know, these people pay for work with a lot of professionals that, ah hey, maybe it's time to do sell some and prepare for your estate. And you don't know what they're doing either, right? They could be ah doing some estate planning and estate freeze. Who the heck knows?
01:00:46.45
value_podcast
Right, for sure.
01:00:46.79
Barry Schwartz
Yep.
01:00:48.12
value_podcast
That was just a curiosity. I also agree with what you said. And lastly, this is a more serious one, I would say, which is actually a talent retention. um I know that there is quite a bit of churn in the acquisition, the M&A teams, at the subsidiaries, and even at Constellation. ah Some of them go into private equity. Some of them build their own copycats.
01:01:14.16
Barry Schwartz
Yeah.
01:01:14.92
value_podcast
my My concern isn't so much about the copycat because Constellation has a life of experience in the business and obviously the reputation and so on. But I believe the talent retention is still a um ah concern, I would say. So how do you think about that and looking into the future? ah won't it be harder and harder to to motivate people to work for you when you aren't offering like best class salaries and also you you you are maybe ah forcing them to buy shares ah in a company that they are not directly, ah let's say, affecting the results in the case of Constellation.
01:01:56.80
Barry Schwartz
Yeah.
01:01:58.81
value_podcast
Obviously, the spinoffs resolve that, but um yeah.
01:02:00.52
Barry Schwartz
i Yeah. Although those are good, that's a ah well thought out question. I don't really have an answer for that. I guess it better to talk to Jamal at Constellation, the CFO, and and get their take on on that. um Ideally, I think the the management and and Jamal and Mark Leonard have spoke publicly about this. is they are going to try to change the incentive structure at Constellation. I think that was maybe in hindsight, leonard would tell you Mark Leonard would tell you that he wished that he set up the company to reward based on the individual vertical performance of that business unit instead of the overall company. and I think they'll rectify that in the future by with the spinoffs and be more nimble.
01:02:49.43
Barry Schwartz
um but Yeah, i business ebbs and flows. And yeah, there's gonna be copycats, and there's going to be ah private equity ah people leaving, and then they could come back. because ah just because just because ah you know Just because everybody learned how to make a certain chicken recipe doesn't mean that yeah you know you can make it as good as the original.
01:03:03.82
value_podcast
Yeah.
01:03:15.52
Barry Schwartz
So, you know, just... Things things can change there. I'm not so concerned about it. I think you know the the health of the company is tremendous. the the stock price Anybody who's bought the shares or been forced to with their bonus, I think it's worked out quite well for them. and ah you know Consolation will evolve. I think they'll figure it out.
01:03:39.13
value_podcast
Perfect. Yeah, so I don't want to take too much of your time. ah You were already super generous. ah So just to finish off, I sometimes do this thing that I call the fire round. So I tell you three or four things, and then you give me the first answer that comes to mind.
01:03:52.16
Barry Schwartz
Yeah.
01:03:59.10
value_podcast
Ideally, it would be a short thing, maybe one word or a sentence. So when you're ready, let's let's do it.
01:04:02.86
Barry Schwartz
Okay, do my best. Let's do it.
01:04:06.81
value_podcast
Okay, so the first a thing is time management.
01:04:12.22
Barry Schwartz
ah Be selfish.
01:04:14.95
value_podcast
Okay, cool. ah Best company you ever came across that few people know about.
01:04:21.00
Barry Schwartz
Oh boy. I'm probably the one we just purchased, which is MSCI.
01:04:28.91
value_podcast
Okay. And lastly, family.
01:04:35.25
Barry Schwartz
Cherish them and don't screw it up.
01:04:38.39
value_podcast
Cool, cool. Those are are good ones. I liked it. um Yeah.
01:04:43.48
Barry Schwartz
Good good ones.
01:04:43.92
value_podcast
ah Thank you so much.
01:04:44.08
Barry Schwartz
Good questions, David. but
01:04:46.86
value_podcast
So yeah, I can't thank you enough for sharing with us your knowledge and feel free to come back whenever you want or anything like that.
01:04:56.19
Barry Schwartz
my My pleasure. I'm just trying to be a sponge. Everything that i has come out of my mouth is because I've learned from other people. There's no original thought in my brain whatsoever. And I think that's the best way to be. is There's no points for originality.
01:05:10.08
value_podcast
yeah
01:05:12.31
Barry Schwartz
I'm just trying to learn from other people and find our style. And you know ah my one word of advice to your listeners is do what makes you happy in investing. right you know there's It's better to be happy and enjoy doing what you do than ah being filthy rich and hating every minute of your life. And so that's what I've, um I'm lucky that I'm moving in that direction and I'm in a really happy place with ah what we're doing at Baskin Wealth.
01:05:34.96
value_podcast
Yeah. Yeah.
01:05:42.38
Barry Schwartz
And I'm so thankful that I have great and grant employees, great partners, great colleagues, great suppliers, and ah most importantly, great clients. Thank you for your time and excited to see how you progress in your career.
01:05:58.40
value_podcast
Yeah, hopefully we'll stay in touch. And again, it's always really motivating to to speak with people better than you because yeah, you can really get a blueprint and not just copy shamelessly everything, but try to wear on yourself the ideas that you learn. So um yeah, it's it's really interesting. And again, thank you so much and maybe see you next time.
01:06:21.57
Barry Schwartz
Thank you so much.
Barry Schwartz: Constellation Software, Human Nature, Baskin Wealth Management | ValueHunt #21