Adrian Meli – Active Equity Excellence at Eagle (EP.459)

Summary

• Investment Philosophy: Adrian Meli emphasizes the importance of identifying scarce, high-quality assets that are seldom available rather than chasing popular but less valuable opportunities.
• Career Development: Meli's early career in hedge funds provided a broad exposure to various asset classes, allowing him to learn from top investors and develop a generalist approach to investing.
• Market Evolution: He notes the shift in investment opportunities over the years, highlighting the increased competition and efficiency in markets as capital flowed into hedge funds and other high-fee structures.
• Investment Strategy: At Eagle, Meli focuses on a long-term investment strategy with a concentrated portfolio, leveraging a generalist framework to identify outliers and capitalize on market inefficiencies.
• Organizational Structure: Eagle employs a unique compensation model by paying analysts salaries instead of bonuses, which aligns with their long-term investment horizon and reduces short-term performance pressure.
• Market Opportunities: Meli sees potential in areas where capital is flowing out, such as certain SaaS companies and homebuilders, suggesting these sectors may offer attractive long-term returns despite current challenges.
• Industry Trends: He discusses the impact of indexing and short-term capital flows on market efficiency, suggesting that the current environment may present opportunities for active managers who can focus on long-term value.
• Future Outlook: Meli is optimistic about Eagle's ability to attract talent and clients by maintaining a focus on long-term excellence and adapting to changing market conditions.

Transcript

The best deals aren't those unsellable teal crocodile loafers at the designer outlet on Black Friday that everybody is tempted to once or to buy once or twice. It's those, you know, kind of scarce few great assets that come on sale very seldomly that you got to jump at when you see. [Music] >> Adrian, thanks for joining me. Thanks for having me. It's always fun to spend time with you, Ted. would love you to take me back to wherever it was, college, when you first got interested in investing. I was born in Green Bay, Wisconsin, and my parents separated when I was a couple years old. And so my mother took me to upstate New York to live with my grandmother. And in a twist of fate, she ended up meeting somebody pretty quickly thereafter and married my father who ended up raising me as his own. And I mention it because it was formational in my life. And so from there I moved to Massachusetts, to Georgia, to Texas. And I grew up in the South. And so my first dog was named Maverick. So I'll let you guess the city I grew up in. But it was really interesting. My dad had a few traits that really influenced my upbringing. He was a very hardworking businessman who loved a good deal. And I say loved because, you know, sale wasn't enough. It was like a sale on a sale on a sale. And it was everything we bought. You know, you better believe the alarm clock was set for Black Friday early morning. We would go to auctions and I remember we bought pinball machines and we buy rugs and and just to show you how deep it went, one time we went to Disney World because there were Madam Alexander dolls that were very collectible and valuable, but each person can only get one. So me and my three siblings and my parents all waited in line for hours at Disney World to get these to pay for the trip. And so that was growing up and all the games we played growing up were Monopoly in a choir. And my dad was ruthless. It was like if you didn't make a trade with him, the next round it was like he would raise the price $100. And my mom would warn people off from playing against us because it was so ruthless. And so, you know, I kind of started, I don't know how much of it's genetic or environmental, but my parents will retell the stories of when I was a kid, you know, in first grade, I got a call from the school because I had taken my birthday money and was buying all the Garfield folders at the school store and reselling them. And I think they were proud and thought it was funny. The next year was a little diceier cuz the school called cuz other parents were calling in to complain that I had started a trading booth and I was trading chachkis from my house for their parents' jewelry and clocks. And so, you know, that's kind of how I grew up. And so I ended up my whole life doing things like this, right? And I ended up going to I was very fortunate. I got to go to Williams College, which I had never heard of till I was a junior in high school. and a kid a year older than me who I was thought was so smart got in applied there and I was like hey that must be a good school so I applied and in retrospect when I got to Williams I was pretty young pretty green immature coming from Texas I hadn't seen a lot of things in the Northeast right like it'll sound bizarre but I had never heard of boarding school or I never heard of squash I didn't know people had SAT tutors I couldn't believe I was sitting in a group I was like you guys had a tutor and while I was at Williams I got to grow up a little bit and I was in econ on psych major and I love the way those two intersect in behavioral finance and I ended up taking interest in investing and I wrote a paper about how hedge funds outperform mutual funds and so when I was offered a chance to join an investment partnership right out of college in 2002 I jumped and put both feet in. It was just a terrific time to enter the world. And you know, tied up, it's all the same for me. Whether I was buying Garfield folders or looking personally at buying hotels below replacement costs after the financial crisis or buying stocks today, I'm always looking for an arbitrage, a way to make money without taking much risk. And given the house I grew up with, what was important to learn along the way is the best deals aren't those unsellable teal crocodile loafers at the designer outlet on Black Friday that everybody is tempted to once or to buy once or twice. It's those, you know, kind of scarce few great assets that come on sale very seldomly that you got to jump at when you see. And so the fun of it for me growing up today has always been the thrill of the hunt. What was that early hedge fund experience like right out of college? >> Oh, it was terrific. And you know, cuz you were there, but I came out in 2002 and it was like drinking from a fire hose. It was just enormous alpha pool, right? And so the firm hired accounting professors from business school to teach me accounting when I got there. and I went right in. It was like I still remember the looks on CEO's faces when a 22-year-old in a floppy ill-fitted suit would walk in and they were so disappointed that they had to meet with me for an hour, but there was no LinkedIn. They didn't know who I was. And so I took the opportunity, you know, it's like tons of field research. I would show up at annual meetings and harass business executives, you know, and and and board members. I would go to landfill hearings. I would pull court documents. Just tons of stuff like that. I got to do I mean you remember the time that after the.com bubble burst I got to do distressed debt I got to domestic equities international equities look at all sorts of different asset classes it was just really fun and I was pretty I say pretty tenacious about figuring out who the best investors were and I would hunt them down and I would try to figure out what they did and replicate it I would go back on 13s from three or four or five years lag like playing sports growing up and say okay let's go back to 1999 2000 why did this person make this investment? And I would try to replicate that idea. And so it was really a great time to learn and I think a lot of things came out of that. My take away from that period was like look, you had no talent there, right? That's why it was early. That's why I got a job, right? They were needed to manufacture young analysts. Like I wouldn't have gotten a job otherwise. And you had a lot of aggressive smart people in an unconstrained structure in a huge alpha pool. You had a lot of large cap stocks that were overvalued. A lot of smidcap stocks that were undervalued. You had debt in pipelines and cable systems and cell phone towers and Enron bonds. Big alpha pool there. And a lot of interesting spin-offs and special situations and the capital just hadn't flown in yet. And so what I took from it is like look, doesn't seem like a coincidence to me that a lot of the best hedge fund returns in history were created from the late 90s to like 2010 when that alpha pool was really big. It was just a really great time to learn being in an unconstrained vehicle, working around smart people and getting to go meet with company after company. >> When you had that breadth of opportunity set was distressed, equities, international equities, shorting, CDS, and you're just a couple years out of college, like how did you find your grounding to learn what it was you were looking for? >> So, I don't want to overstate my skill in each area. If credit is a little too cheap, I'm not the guy to do it. For me, you know, growing up, what I'm always doing is looking for outliers like in any asset class. So today, you know, my partner Alec Henry and I will follow I'm on runs today for latestage privates. I follow credit. I follow real estate. I follow assets all over the world. And I think this is more of a generalist versus specialist approach, right? I grew up in a more of a generalist framework. And if something is really dislocated, it's pretty simple to understand a distressed debt. You're buying into a pipeline or what have you at a low multiple of earnings. If you think about this, right, you you learn pretty quickly that you got to look at where money is flowing in and flowing away, right? So, I would look at that period and say, "Hey, you had this great alpha pool. What happened?" There's very low barriers to entry in the investment world. So, big alpha pool, highly highly remunerated profession. everybody, hedge funds on the front page of the newspapers, TV shows about them, houses in the Hamptons, all this great stuff. What happens? People come to it, capital flows in, right? Lots of competition gets in there and all of a sudden those great gross returns come down and now they have a hu on them, right? And so that created more efficiency in certain areas, right? You didn't used to have dedicated distress funds of the size you have today. You the special situations were really interesting, right? the Joel Greenblat stuff, the spin-offs. You could see a spin-off. A big fund house would get a stock, sell the stock indis, you know, indiscriminately and you could buy that cheaply later on in my career in that world, like you could see that was getting priced more rationally, right? And so for me, it was like, okay, the capital's flowing here at very high fees. The returns are coming down. The net returns going forward are likely to be lower. And one of the things I, you know, I'm not that skilled at a lot of things, but one of the things I think I've done pretty well in my career is is trying to see around corners and it looked like to me like the net returns are going to be lower. >> So you're in the hedge fund. You're you've got this wide remmit. You feel like the returns aren't going to be as interesting. What do you do when you're sitting in that seat? >> So I really like my seat and I love that world. If you're lucky to have a good first employer like I did where you can learn a lot, you'll learn things that you like and that you want to do differently over time that you just you're just wired differently in this business. And we're all wired genetically differently to be able to prosecute different opportunity sets. And so I just had to learn over time where my skill set was, what I was good at. And so as I s started thinking about it, it's like look what I really like to do is I'm trying to compound my own money and clients money, right? I want to align myself in interesting swim lanes where I'm going to be able to generate great returns. Maybe in hindsight it's obvious, but I think it was pretty clear at the time that if a lot of money flows into an area at very high fees, the future returns would be lower. And so I started to think about what I want to do next. and my partner here, Alec and I were talking about different opportunity sets and and I met with a handful of firms and was listening to things and I had a good fortune to meet the folks at Eagle had a terrific track record and I think an advantage structure and I got to thinking about I was like okay let's think about fees in this industry as a cost of capital right if broadly the hedge fund world had higher fees and broadly this firm had more attractive fees could we do the same like why can't the net returns in this structure be higher than the other structure right let's look at the single manager hedge fund world you say okay well what are they doing I got to go to these great investor retreats with this family office that we're both friendly with and you'd meet these amazing analysts like and I was so impressed by all of them and I would listen to how they structure their portfolios and their business and I would always I was like okay so your gross exposure is X and your net exposure is 60 to 80% and your fees are this like how is that going to work like you just have to add so much alpha to get a good net return. Look, I think people in this industry are really smart and competitive. Like, I didn't like having that idea as a cost of capital. I like I prefer as like, hey, maybe I'm not as good as them. I like to have a lower fee. Maybe they have higher gross returns than I do, but maybe I can have higher net returns. Like, you know, and so the way I thought about it, it's like, look, you know, most of the great ideas in life are both non-conensus and right. Plenty of ideas are non-conensus is wrong. And so when when when I had the opportunity to get a senior role here and shift over, wouldn't it be interesting if I joined this world and I got to attack the swim lane of hedge funds that were higher fee and at the same time a lot of capital had left the long only industry and a lot of the talent had left the long only industry. Wouldn't it be interesting if over time Eagle were able to develop this, you know, reputation or scale of hiring the same types of people and bring the same intensity or talent pool from the hedge fun world to this long only side at a lower fee structure. And so, you know, at the time it didn't feel so obvious. You know, I joke around like when we were at these retreats and you know, Alec and my friend group at the time, I think every single person probably or almost every person was at a hedge fund. You know, they would josh us a little bit, give us grief like, hey, someday when you're wrong, you'll be able to come back to the hedge fund world, right? It's not obvious to people that you want to leave a very highly compensated structure and go to the lower fee pool, but we would laugh about it and so we made our bet and in retrospect it was non-conensus and it worked out really well. >> Other than your friends making fun of you, what was it like to move from the hedge fund to the long only structure? >> It wasn't as different as you think. One of the funny things about the industry is everybody looks at somebody at a private equity firm or Citadel or a hedge fund or long only and thinks they're so different, right? Like they're they're the same people. They're just moving around seats, right? Like you meet somebody from Citadel, like they have some of the best analysts in the world or Millennium, right? You meet somebody from a top single manager hedge fund, they're some of the smartest people you ever met. You meet somebody from a top mutual fund, they're some of the smartest people ever met. But what I think was clear was that the competition set when people were looking at us was easier. Like that was very obvious from day one. It's like, okay, a day before you're up against, you know, all these great people that had these great 20 plus percent return streams for the last 10 years and you're like, oh, should I give money to this firm versus that firm? And then you come here and you're like, hey, I'm comparing you to this big mutual fund house or something. So, I think from a relative basis, it gave us an interesting, you know, swim laner opportunity set to attack because the competition set were worse. But I think look if you look at duration like the pjorative term for long onies at the time and I think still people think this is you know people just think it's like a asset gathering business and lazy capital right they would say people would use the term time arbitrage the joke was hey I just underperformed short-term but that's deferred alpha right and so that's why all the capital was seeking hedge funds because they saw all this talent and intensity of research there and so the key was could you bring that intensity of research to this structure Right? And so imagine the business model of an eagle. We have 25 to 35 securities. Let's say we have call it eight people on the analyst team and you hold the security for six years. That would mean you only really need to buy four, five or six new securities a year. And so what if your business model was, hey, you've got all these pockets of of talent trying to get these spin-off special situations at higher fees. what do they have to do to charge higher fees, right? They have to a lot of times you end up in higher more levered businesses or higher growth businesses. And so imagine you found a very low-risk 12 or 13% IRRa. It's very hard to buy that in that structure, right? And around that time during the financial crisis, there were so many interesting opportunities, right? Converts, you know, were cheap or, you know, lots of interesting stocks, right? Tarp warrants, there were a lot of stuff afterwards. It looked to us or me and Alec like the opportunity set was more in these, you know, bigger scale companies that people now call compounders. People weren't really looking out five to seven years on them. And so we, the way we, you know, kind of conceptualize is like, okay, if the business model is we got a large number of analysts, we got to buy circa five new stocks a year, that's less than one new name per analyst a year theoretically in this structure. How much time, energy, and research can we do to get each new opportunity? And can we bring that the intensity of the hedge fund side, but the patience of a long only side and marry the two? And so that's what we've tried to do here. >> As you built out that team, the concept of, hey, maybe you can bring that hedge fund intensity to the long only world. How did that work over the years from when you first came to today? So look, Eagle was a terrific firm before I got here, and if Alec and I do our jobs well, it'll be a terrific firm when we leave one day. The first principles analysis of this industry are low barriers to entry, enormously talented people. If it's not the most competitive industry in the world, it's certainly one of the few most competitive industry in the world. And so if your strategy is, hey, let's just be the smartest guy in the room and you want to create a structure on that, that's not going to work. Like that would be impossible, right? And so what we try to do is build eagle to have some competitive advantages and talent is one part of that. I'd like to think we've built up some barriers here that have gotten bigger over the years or a right to win as I would call it is okay first the firm was built over 35 years ago. It has duration in its bones. Ravenol the founder cared very much about that. And so if you look at it the investment time horizon we hold the stock for over five years. We model on average we model companies out five to seven years looking at normalized free cash flow and earnings per share. Our average, you know, we've had clients with us for many years. They trust us to think long term. We have an average client relationship depending on how exactly you measured a circa 10 years. The client base is diversified by, you know, end market, endowment, foundation, pension, high net worth, sovereign. All of those actors can act differently at different times. This all creates balance and duration into the model. In a world that's become more short-term, that duration is a growing competitive differentiation. But we built it more into the organization than just that. So on the investment side, none of the analysts are paid bonuses. They're all paid salary. And so we want them to be focused on duration. And then it's all built around an investment partnership. Like there's a number of partners at Eagle. And if you think about it, we all live and die by the performance of the fund, right? If we have a bad numbers, there's no reason for us to exist. So we all eat the cooking together. you know, I'm heavily invested in the strategy. Alex's heavily invested in the strategy and we're compounding our own money along with clients and and so we do that on a fund basis, you know, on terms of the stock picking, but also we do it organizationally, right? For if we've been around for 35 years, we think we have an opportunity to be around for the next 10, 20, 30 years. So, we're hiring, attracting, and recruiting talent to continue to build that. And so you asked about talent. You know, that has singularly been the most fun thing about working here is that watching that talent density grow over the last kind of 17 years or so that I've been here. Look at our team. If you looked at their bios, top hedge funds, private equity firms, and the like, and you say, "Well, why did this happen? Why were we able to recruit those people?" Right? I mean, if you met them, they're they're just amazing. Like, I feel so fortunate to work with them. The pitch to them is this. Hey, look. If you love doing what we do, you love deep research, long-term investing, we think we're a good home for you. You come in, you sit sit shoulder-to-shoulder with Alec and me in every meeting, research meeting, debating the entire portfolio, debating new names that you're pitching, and you can have an enormous impact on the future of Eagle. You're going to be you're under one of under 10 people. You can deploy a lot of capital, and you have duration built into the model. You only have to pick one new name every year or two, right, to be successful here. So your likelihood of success given our resources and the time we give you and the ability to debate ideas shoulder-to-shoulder with all of us, I think is higher in this model if you like doing this. And then we take you off the base plus bonus treadmill that you've been on. And we give you an opportunity over three, four, five years to become a partner in the organization. And I think that's a differentiated value proposition, right? Because if you look at their lives, it's different than when I came out, right? You had more demand to hire hedge fund analysts in 2002 than you had a supply of them. Today the seats are tougher. Capital has gone to indexing. It's flowed out of a lot of the long only space. They're there's less hiring there in general. Less, you know, fewer seats are going to be there over time. And it's gone to systematic strategies and more pod oriented strategies. And and the multi-managers, you know, a few of the big ones have just done terrific job. And they're great seats if you are good and want to do that specific thing. But the seats to do what we do aren't that many. So I think that dynamic has grown over time and it's up and down the organization. Our head trader was, you know, at a big bank and then the head of trading for a top hedge fund before here. I never thought we'd have the scale to have one of the best traders. I think we do now. It's on the client side. We have terrific client people. And I don't want to overstate this. This is a tough industry. There's not very big competitive advantages here. But if you think we have duration in the model, we have access to talent. And then the other part I'd marry that with is you look at if you look at the talent side challenge then look at the management access side challenge, right? Imagine you're the head of investor relations at a big company. What's your job? It's very similar to our client team's job. Our client team's job is to go and try to find clients who like what we do, want to partner with us, will give us duration, want to invest alongside with us and and and we'll and will hopefully stick with us through our draw downs, right, which we'll inevitably have. investor relations job is the same but to find shareholders. Their challenge is hey maybe the top two or three shareholders are often are going to be a Vanguard, State Street or Black Rockck and then the people getting capital and calling them often are long short trading frequently and those companies have no incentive to spend time with those pods over time, right? They have a small incentive but not a huge incentive. And the banks have a problem too because they sell management access and the big companies want duration in their shareholder base and so they have this issue where the people that are paying the banks often don't have duration in their shareholder base. So I think in the same way our access to talent has grown over time our access to management has also grown. And if you just think about it how many firms out there deploy $2 to3 billion in a company hold it for up to 10 years and are willing to look we're not activist we but we work with them. We we focus on long-term business issues. You know, of course, we care about short-term results like anybody else, but we really care about how companies are allocating capital and their business strategy in the out years. When we sell the stock someday, we call we send them nice email often saying, "Hey, thanks for all you've done for us. It's been really great to be a shareholder and hopefully we'll have a chance to own that again." If your strategy is short-term, then management access won't matter to you. But if you're going to hold the stock as long as we do, it can matter. And so, you marry all this together and I think we have a bit of a right to win. We have a we've given our shot ourselves a shot to do a great job for clients and then it's up to us to execute and we like our hand. >> I want to pick apart some of the aspects of the business process and the investment process on this this concept of paying salaries only and not bonuses is very different from what you hear commonly. What have you found are kind of the subtle benefits of doing that? >> It's an interesting question. We're counterpositioning in many ways against the multi-managers who are paying terrific sums of money and hiring a lot of the best talent out there. Imagine we're trying to hire from a top single manager or a pod. The way those fee structures work at a single manager, right? They're charging a base fee and then an incentive at the end. So, their earnings are lumpy, right? We don't have that issue as a firm. So, we there's no reason we have to pay a base plus bonus because that's not how the partners are paid. So, structurally, it's irrelevant to us. The right question we ask ourselves is what's the best thing for the analyst in the firm, right? So there's a few aspects of it that we like and there's no proof that this is the right way to do it. It's just the way we've done it. It's like okay, so if you're at a top fund, you're getting a base plus bonus. The way it actually works is you get your base salary, you wait all year long for your bonus and you're thinking you can't focus on anything else at the end of the year and then you get your bonus and for one or two days you're like, "Okay, I got my bonus." And then you start thinking about your next year's bonus, right? So it creates a really acute sharp focus on end of years or whenever the bonus season is. So we wanted to push people away from that. Number one. Number two, in our structure, the N is so low, right? They're not buying a bunch of new names over time. So to evaluate them on short periods of time when we want the investment case to play out over three, five, seven years doesn't seem aligned. There's just al also a couple practical benefits, right? They like it better, right? They get paid every two weeks or so or whatever it is. It's ratable. We don't defer them. And then it also makes it pretty hard to hire them, I think, over time, right? Imagine you're trying to hire one away. They have to think like, hey, what's the expected value of this low base plus high bonus structure versus, hey, if I do a great job here, I get paid ratably or whatever it is, and then I get a chance to be a partner. And so, I think the real tangible benefits organizationally on the investment side, focusing on investing out and over the right period of time. But I also think it's a good to counterposition against the big pots. >> When you started your career with this very wide opportunistic mandate cross asset classes and geographies and now it might be a little more narrow. You're just buying stocks. Where do you start thinking about where you want to look for ideas? >> That was a nice way of saying it. The reason everybody came into the hedge fun world because it was so fun. It was just like you had this big mandate partnership vehicle. You could do anything you wanted, right? that doesn't really exist anymore in in broad strokes, right? It's been diced up, right? You've got the you've got the distress funds, you've got the pods, you've got some single managers left, but it doesn't there's not so many so much capital going into broad opportunistic mandates, right? It's become more specialized. I was having this debate with somebody recently. We were talking about return streams over the last 10 years and you know I think we've done we're proud of our record here and she made the case that hey yeah but you you guys have that return stream because you're a large cap equity investor and I said hm I think you're saying that in a pjorative way. I was joking around with her. The truth is that's not the way Alec and I saw it. The way we saw it is we picked to do this. We thought the returns going back in time Xanti of larger domestic equities were the were really good return streams with very low risk and it was a great way to compound our capital personally and for clients and we picked that. So that's our personal selfish view of it. I I I know people can take issue with that. The starting point is can we generate absolute double-digit returns over a long period of time? Think of us as absolute return investors living in a relative return world. We're modeling companies out five, six, seven years looking at normalized free cash flow earnings per share assuming a smart buyer is going to want to buy that from us and get an 8 n 10% return such that we assume a terminal multiple that's fair and we look at the IRS out there across our portfolio across other companies and and when we do that the opportunity sets shift over time like they're not sometimes Eagle looks more growthy sometimes it looks more value it just depends on what that opportunity set is out there Right? And so we to do what we do, we want to turn over the most amount of rocks possible to pick out these return streams. Right? And so a good way to find those is where is capital flowing into where is capital leaving. Right? So if we go back in time, it's been also really interesting. Then you know compoundary type businesses were interesting after the financial crisis. And then I think people misunderstood the return streams of some of the big tech platforms. We were fortunate to identify some of those early on. You know we we've always been pretty snobby about accounting here. And so I think we understood the the accounting of some of the intangibles early on which was was pretty fortunate. And so today if we look at it we look the return streams we're finding today are different than they were 5 years ago and 10 years ago. Before I pause on this one thing one story I'll tell that I remember that's always stuck with me is when I was back in my early days I saw this record and it was like the best track record in hedge fund world you ever seen. And I told somebody I was like this is the best investor in the world. It's got to be look at these returns. you know, so self-confident, you know, at that age. And the guy told me, anybody who has those returns in one year, they're taking some factor or some specific risk that is not going to be able to be replicated and it's just a matter of time. And so I've always taken that into account and we've taken that into account when we're trying to build our portfolio here, right? What we're trying to do is have a portfolio of return streams that play out at different periods of time, different parts of their life cycle with different factors involved so that we're not reliant on whether interest rates go up or down or the economy strengthens or softens or something happens in Taiwan. We think the base rate of getting that right is lower for us. When you dive into companies across that type of spectrum, you think about five to sevenyear free cash flow analysis, there are certain types of businesses you might think of like valueoriented type businesses that it's a stream of cash flows and you can measure the the big tech ones that you've been in from time to time, especially today that are spending massively on AI like how do you think about measuring free cash flow of a of a fast growing business? >> It's tough, right? And so the dream is to buy a franchise company with a huge mode at 14 times earnings that's going to grow faster than nominal GDP forever. It just the world figured that out, Ted. You know, it doesn't, you know, life is pretty tough, right? And so look, I think if you go back in time and look at some of the big tech platforms, those, you know, my only quibble with some of the asset allocation community is like I like to think there it was somewhat predictable 10 or 15 years ago that these companies would be able to scale globally with the internet and be better return streams. If you looked at it and you looked at the structure of these businesses and what the internet allowed, you could compare them. I can see that the profitable businesses in these countries have this margin and the growth investments have a zero negative margin. You could see how the margins would play out. But to get that right, you have to believe the moes in check. And so a couple thoughts on this, right? So I believe all companies die in the end. It's just a question of when. And so when I see today the opportunity set and I see a lot of these formerly great businesses that have followed my whole life trade at 30, 35, 40 times earnings, I see a two and a half 3% free cash flow yield. To get a double digit return, what do I need? They already have high margins. I need for them to be able to grow revenue maybe at organically 6%. Most companies don't outgrow nominal GDP forever. I and I need them to use their balance sheet a little bit and I need the margin the multiple never to go down. And that's not my experience in this. If I buy a company at 10 times earnings on trough earnings that is going to grow earnings a few percent. I don't need much to happen to get double digit returns. One is not the better better earnings stream than the other. Right? And so the way you construct an earning stream for us is you look at the earnings or free cash yield. You look at the growth of that and then the multiple plus or minus of that. Right? And so on the tech side you know in the AI build today I think it's really tough. It is hard enough to identify what a big search engine is going to look like in three years, what the profit pool of that is with the growth of chat GPT. The idea that so many of these companies trade at high multiples seems hard to hard to justify. Our best guess is look, you know, some great companies will take out costs, make money on AI. There'll be a lot of that, but there'll be a lot of disruption. If this is right, the capex build, it will be overbuilt. Things get overbuilt. Infrastructure, highways, all these things. you ultimately in a capex cycle overbuild. You just don't know if today in the third inning or eighth inning. And so I think we're a little less comfortable with those forecasting some of the big tech earning streams. And then within that it's like okay you just have to be honest with yourself right like imagine you know 5 years ago right what what was happening SAS companies you had all these like trading at 40 to 50 to 60 times revenue at one point today it's hard to give away a lot of SAS companies right so there will be a lot of companies today that look like obvious winners of all this that I think will be obvious losers and so if we do our jobs well we'll be able to find a number of names that will benefit from AI we'll be able to find some in the middle that aren't obvious beneficiaries of AI that will take advantage of it, which we have some ideas there, and then we'll hopefully avoid a lot that will get taken out by AI. >> If you go back to your friends teasing you about, well, your track record is just large cap growth. When you have the opportunity to spend the time to dive in on a large cap company, what does that work look like to get your hands around something that presumably everyone has access to all the information on a big company? I grew up doing a lot of small cap stuff in midcap and you do it is true you can get better access and differential access right there's no sellside coverage or limited there people aren't focused on it the problem is that asset pool is not as rich as it used to be right if you looked at the small cap index today right you'd say well it's a lot of biotech a lot of unprofitable companies a lot of the big conglomerates took out a lot of the best franchises there private equity owns some of them and then there just haven't been as many IPOs of those companies and so it's not that we're dispositionally wanting to do large cap I don't consider myself a large cap investor. We own some smaller companies here. It's that in a world of AI, tech change, globalization, all these things, these companies got to grow bigger and stronger and scale faster than we had seen in history. And so the process of ripping them apart, right, it's a little different. To your point, I think like you know, if we're being intellectually honest, you know, some of the big tech platforms like the founder doesn't go meet with us a lot, right? It's like they like they got better things to do. they're worth the hundred $200 billion without like taking my phone call. That said, we actually do get pretty good access to them. And so the easier companies to rip apart are the ones that are less conglomerated as conglomerates, right? Because if you buy a big conglomerate with 10 business lines, you're not going to rip apart every business line. But some of these big companies are very focused on on individual areas. And so, you know, the the investment process, the research process here is first, okay, could this be an interesting return stream? Why is it dislocated? Do we believe capital's flowing into this area or out of this area? Is it likely we're going to find an interesting return stream to start? Right? What is the disruption look like in five or 10 years? If we were and we're, you know, we worry about too many risks then play out, right? If we were looking at a railroad, we would be debating like self-driving electric trucks. Doesn't always play out. We met with Astroeller, the head of Google X over 10 years ago, and he was in here and we're talking about self-driving cars and we thought self-driving cars were going to happen. So, we avoided a lot of things thinking self-driving cars would happen. So really what we want to know is is the base rate a return assumption of the asset. Does it look high? Do we feel like it's going to be when we're selling the stock out five, six, seven years, we have to know if the next buyer is going to be looking out a few years. So we have to have a view on is it going to get disrupted in this time horizon, right? And so that's the starting point and then it's like okay, you know, all the normal stuff. Okay, reading everything we can get podcast on it. Hey, find the CEO. Find anybody we know who's worked there. Anybody, you know, executives there. Tons of back, you know, background research on the company and the executives, you know, looking at the executive compensation. >> You have a portfolio that has some of those names alongside of clearly contrarian plays. Curious how you organize your team to kind of prosecute these very different opportunity sets. So this is something we've iterated and and tried to learn at over time. We have a generalist framework, right? We're looking for outliers. But then within that, we have a pragmatic specialization. And the truth is it would be very hard to build a team if you started from scratch today of 10 very great senior analysts with just generalist frameworks because they're coming from single manager hedge funds often or pods where they've had a specialization. So what we want to do is we want to notice outliers and then we want to press within the analyst function when we notice an outlier. So we want to be dangerous enough that we can notice outliers and then when we do that we want to spend an incredible amount of time doing deep research to make sure we're expert within that area. Once you dive in and start to get conviction in a in a company, how do you integrate the the idea of where fund flows are going? And you could think about it as both the index funds and passive management and the pod shops on the other end of the spectrum. >> So I like the question. I'll accept it. Um my career starting in 2002 was very clear in retrospect that the markets were trending towards efficiency. And I thought indexing was a big part of that for a long time. The easiest way to explain it to somebody who's not in the industry is like you and I go into a poker parlor, there's a hundred people around a table. You take out the 40 worst, which was indexing, and the remaining 60 is harder to beat. That makes it more competitive. Return should go down, right? And it turns out this actually happened in real life. I think maybe 15 years ago, I read a story about when the US made it so you couldn't play poker online. There were a lot of people who were making a living here, playing against people in financial services who were having three beers at night, hobbyists or whatever. And they were playing 15 hands at once and great poker players, right? And so they were making a living. And when they could no longer play here, a lot of people moved off short. They were effectively playing against each other all of a sudden. And this is what our framework for investing had been. I think one of the misnomers of what's happened to the active management world over the last 10 years. A lot of people think that this framework is what killed active management. Impossible to beat the market. The world was trending towards efficiency. Right? That's why a lot of active management hasn't done well for the last 10 years. My framework's a little different and I'll catch it up to today. is for the last 10 years. I think part of it is passive have made the world more efficient and the talent density running into the industry and the computers and the systematic traders and all the smart people, right? But part of it is really the opportunity sect. I basically think mega cap technology killed a lot of the active management world. And the reason for that is pretty simple. If you study the history of alpha, you realize there's just different alpha pools at different times. And so if you're in a world where let's say you're competing against a market cap weighted index, what happens is if you just look at the math of let's say you were in a very very concentrated index where the biggest weights were then up the most. It would be hard to beat that index. If you didn't own any of those big tech weights, imagine you had to replicate the performance of those by not owning them. I mean it's very statistically unlikely you were going to beat all these big tech platforms that were scaling fast, growing by not owning them. So your track record is impaired. Now, let's just say you did own you over time looked more and more like the index, right? Your active share goes down. So, the alpha dispersion gets slower. So, is it a coincidence that a lot of the best hedge fun track records were created from the late 90s to 2010 and then a lot of them don't look great or is it a difference in alpha opportunity set? And so, if you bring it up to today and you say, okay, Xanti, what does the world look like? Where is the capital float? Where are the opportunities? Indexes are sometimes really good, sometimes they're not. Right? You go parts of Japan for 25 years, you know, look at China, look at US was negative for over 10 years. Look at parts of Europe, emerging markets. They're not always great indexes. And so sometimes the index is really good and sometimes it's not. And so that's been magnified recently. And so I have a sneaking hypothesis that I'm hesitant to say out here because I there's a high probability I'm wrong, but I will say it. I feel like the market's becoming a little less efficient in certain areas. And and I'll explain it. Let's just look at the last five years and say, "Well, does that look efficient to you, Ted?" Like, what happened in 2020? It was like all these fake companies at enormous multiples, Spack Bubbles, unicorns. It was a meme stock frenzy, right? That didn't look so efficient in retrospect. You couldn't give away a cyclical company, so to speak, right? Two years goes by, 2022, what happens? Interest rates go up, regime change, the whole world shifts. Tech stocks plummet. Chat GPT comes out. Tech stocks are back up. Now, we have a meme stock frenzy. Momentum factors off the charts. And you can't give away any of these companies that have unpredictable earning streams right now. We want to be very careful. This isn't easy to harness. It's hard to beat the market. But it looks to me like what's happening is the market is becoming a little more efficient over the last 5 years in real time. And why might that be? So when we talked about the world becoming more efficient from indexing, one of the things that I don't think was often discussed is there was this view that over time, right? Okay, we could get how much of the world could be indexed, right? Could you have 99% of the world index? Could you have 90%. Nobody knew the answer. But the idea was in the end there would be these 10 smart funds in the end setting the price of the market perfectly efficiently. It kind of makes sense in an academic sense, but like most things in finance, ideas that start like that make sense at the beginning become goofy at their extremes. So what if you got to that standpoint and you got to that state of of the market? How would fund flows influence things, right? What if you had very few active actors and now you had a retail like a stimulus check came in and then there were a bunch of retail buyers of specific assets but there's not liquidity there. How does that change the market dynamics? So if what you have happening now is the market is indexing and growing indexing. The capital has flowed to multi-managers and quant strategies or systematic strategies. A lot of these folks have done really well and their mandates are short-term. And then you have this long only community which you know you look at and you say well they're under you know stress they're shortening their time horizon. You have the sell side who shorten their time horizon to respond to the actors. And you look at all this and you say oh my gosh all the capital is flowing to a short-term opportunity set. And then you see what do you see? You see anything related to the the the momentum that the the the test of the times AI power factors going crazy. And then you see these great compoundary businesses trading at 35 times 40 times earnings. And then you see these return strings over here that you can't give away like okay the path looks very uncertain but the destination looks pretty good. Whose job is it to buy those right? How where's the capital to buy those names right? And it's not because people are stupid. It's because if you don't know if you're going to be in a seat in two or three years why should you do that? And so it makes sense to me today that there is growing differentiation in those names out there. And it is harder to buy them because the return streams are imperfect and the path is uncertain. But in the end, what we're looking at is what's the entry multiple? Are we below midcycle? How fast are earnings going to grow over time? And what's the likely end state? If you go back 10 years ago, our portfolio looked more growthy. Today, our portfolio is trading at an enormous discount to the market because that's where we're finding the opportunities. And it makes sense to me conceptually that as the capital has slowed short term and the and and the liquidity has gone down in many ways that the opportunity set would be shifting. >> What are some examples of situations where the path is uncertain but the destination you have more confidence in. >> Pull up our 13F. You'll see a lot of it's like look it's not fun. I don't want to be blas about it. It's like you buy one of these things and it goes down every day and every time we sell something that has momentum in it, it goes up the next day. Let's give a few random examples of what that could look like today. without being too stock specific, right? So, let's look at, you know, something in the headlines today like let's look at, you know, SAS companies. SAS companies, everybody thought they were these great businesses and now today they're trading at low multiples on our view of normalized earnings. So, what we want to know is what's the endstate margin structure of a of a business, right? So, what does that mean? Stock comp you have to tax. And so, a lot of these are stock comp pigs. So we care a lot about who's managing these. What's the retention rate of the business? You know, what's how is the sales efficiency look over time and then what's the natural end state of the margins of that? You know, we have a view on some companies, right? And so the reason they're trading cheaply is because AI, right? Now AI might be right. AI might take out all these SAS companies. Like that's a legitimate bare case, but it might not, right? And so you could look through that opportunity set and there's a lot of smart private equity firms still deploying capital there and you could say are all of them going out or are there going to be some that survive and then they'll they look like they're trading at very low multiples in a world that's paying very high multiples for quality businesses and these once were perceived as quality businesses. You can imagine things related to building products or home builders today, right? I think there's a pretty clear consensus that homes are unffordable, right? Home prices gone way up over the last few years. Mortgage rates way up. We're under building the amount of new homes we need. And there's this I think too strong bull case that we're under supplied by 3 to 5 million homes. Yeah, maybe like but you have to be able to afford them, right? So I don't I don't really believe it. But I think it's pretty clear a lot of these companies are trading at lowish multiples on low below normalized housing starts and and it's affecting a lot of companies. Not all of them is a great opportunity set, but I think there are things in that space that if you close your eyes for 3 to 5 years, home, the home building industry, the building products industries, there will be a better day ahead and if you could buy some of them at trophy multiples on trophy earnings, that could be interesting. The one in the headlines today that like look, they may work, they may not, but there's HMOs out there. The healthcare industry, there's a lot of pressure, a lot of pressure in Medicare Advantage, a lot of pressure in certain segments. The margins are way down in certain areas. The multiples are way down. These stocks were considered great companies 18 months ago, 24 months ago, compounders, some of them trading over 20 times earnings, high teens multiples today. Are we at trough margins and are we at low multiples now that these dropped 40, 50, 60% some of them? And is the healthare system likely to be very different in three years or are the margins likely to be higher? Are these likely to look better? And you have to get through the newspaper articles and all these other things. They're not easy to own. And so when we're buying things like this, again, this isn't our whole portfolio. These are a few examples of things today that are hard to own. Sometimes it's hard to own mega cap tech. Sometimes it's hard to own things like this. I don't want all my portfolio in any one of these areas. I want to have a portfolio of 25 to 35 things like this where the return streams look really high out 5 to seven years and I know some won't work. >> When you see these opportunity sets coming up through whatever analytical screens and then you do your deep dive work, but you're only buying a few names a year. How does that decision process work? Everybody wants to have this like beautiful funnel slide where hey I look at this many names it feeds through and like we got this great process that spits out the names. It's imperfect, right? There's like some of it's fundamental analysis on IRR, some of its judgment, right? And so I believe a bird in the hand is worth two in the bush. We have a dashboard internally and what we do is we pull through all of our companies and we look at the earnings models that we have internally and compare them against analyst sellside. We compare them, you know, we look where we're at consensus out 5 to seven years. We look at analyst level conviction. We look at the returns that we expect relative to the volume of the asset which is an imperfect measure. So if we have different return stream, if one of them is non-yclical with a clean balance sheet, you know, recurring revenue, great management, and it shoots the same IRRa as another name that has all these hairy characteristics, I should be buying a lot of that first return stream, right? And so what we're doing is we're looking at all the return streams possible and then we're saying, okay, what are the best riskrewards? And the portfolio isn't sized based on the highest IRS, right? A lot of times the highest IRS have the biggest you know fattest tales to them right and so what they are sized by is a combination of judgment IRRa and just perception of riskreward right things the bigger positions tend to be things with a lot of ballast in them good balance sheets good management and the smaller positions tend to be things either we're entering or exiting or things that you know have have fatter tails and so the other aspect of this is given that we want to have a diversity of bets if you bring in a new name and if let's say owned a bunch of something in a sector today and somebody comes up with a new name in there, it's going to have a higher bar. And so we prioritize, you know, more diversity of earning streams. We prioritize higher IRS. We prioritize returns relative to the risk involved. And then we try to build a portfolio that that will work in, you know, a broad set of outcomes that we can imagine. A few years ago, you created what I think was one of the first active ETFs and would just love to hear the thought process of that structure and why that was somewhere you wanted to put your money. >> Yeah, sure. So, again, we have to meet clients where they are. There's a lot of excitement about ETFs. People like it. People like being able to click a button. People like, you know, different attributes of it. and and so we were able to do it for clients and you know it's I think it's been I think the reception has been much higher than I would have thought right and it's funny you know to hear people tell me I bought your ETF or something you I still am getting used to that it feels different but again what we're trying to do is add value to clients meet them where they are a lot of people are like this structure and we want to have a resilient business so it I think of it as increasing the duration of the firm giving clients another way to access to access us And it's fun to be early on things. >> As you look out over the next couple years, what do you think Eagle becomes from here? >> We're pretty simple. The firm is named Eagle. It's not named after everyone any one person. Doing our jobs well means continuing to grow the talent side of the firm and continuing to attract great clients. You know, if we can do that, I think we'll be able to out alpha over time. And so there's no, you know, we're not there's no growth mandate here. We are big enough to hire who we need to hire and build this great firm that we think we build, but we're also small enough that we can still find interesting pockets of alpha. And so it feels kind of about the right size. You know, we could grow a little, shrink a little. The the the northstar to us is really like it's like I would say it's growth and excellence. That's what we're solving for. People focus in this industry on flows and all this stuff. I get it. But like if our performance is up 15% or down 50% that influences much more than anything else. And so what we can solve for is talent, making ourselves relevant in the world, and trying to build the excellence of Eagle. And I think if we do that, everything will play out well. >> What are some of the ways you're trying to improve the team and create that excellence going forward? >> We're trying to hire people that are better than me. And I think we've done that, right? It's if you meet them, I mean I mean it's pretty special. My wife was a kindergarten teacher. She's like, this is ridiculous. It's like you get to meet with all these interesting people all day, work with these really smart people who are super talented, meet with management teams and and you get to learn like you know effectively I I think I have the best job in the world. I get to learn all day long and work with these really talented people. And so organizationally to increase the excellence we recognize that every year that goes by we have to get better and we're competing against these really smart players out there. making sure the management layer of the firm is thinking through all the ways what are the things we need to be able to do to attract both capital and talent and then on the on the talent side again it's okay how can we make this a great seat for them a great career for them and if we can continue to do all this stuff right I think a lot of the industry is falling away and so it's it's really we can get better while a lot of the industry is under siege and if they keep shrinking their time horizons and we keep using duration and investing organ organizationally then I think our wedge continues to grow and that's what it's all about. >> As you look out on opportunity sets with this idea of seeing around corners, what do you have your eye on that may become the next interesting say contrarian opportunities over the next couple years? I've always focused on the flow of funds. If you look at like the last 10 years, the index has been great. That's been the place to be. I feel differently a little differently about it today, right? So I look at that like any asset and I and I want to tie it all back to what you said. So today I would look at that same asset and I'd say, okay, higher multiple, less diversified, more of a factor bet on AI and power. We've run the economy hot, tons of fiscal deficit problems, all these things. If I just look at that and you didn't tell me the name was the S&P index, I would say, hey, maybe whatever percentage of my money I had in that 10 years ago, I might want less today, right? That is how my brain would work. And then I would think, okay, well, where do I want my money? And it doesn't mean you should give it to Eagle or private equity or private credit or what, Bitcoin or whatever. But it does mean as a starting point, we have to look at assets and valuations and how they change over time, right? And so I think the index is less interesting today. You put your money there for 50 years, I don't know, 8 n 10%. But the base rate of starting from here is looks a little tricky. Now AI could bail us out and productivity growth could go crazy. Who knows? I'm not bearish at all. I'm on it. I'm just saying it looks a little worse the base rate to me. And yet it seems odd saying this because the NASDAQ and S&P keep setting new highs. But we're still finding things that we think are really interesting. But there's plenty of things that are flat or down over five, six, seven years out there that I think are interesting and at low points in their cycle. And so I go across all assets, right? And say, okay, private equity, uh, venture capital, private credit. The same way the hedge fund world was a great opportunity set 25 years ago, but the fees came in, you know, too high of fees at too much capital, the LBO world had a great opportunity set too, right? They had they had less capital there. They had lower multiples and rates came down, right? And so I look at that and it looks to me like, hey, same thing. Lots of capital goes here, lots of smart people go here and the forward return streams comes down. If you want to give me one of the top cortile of VC firms, you want to let me into union square ventures or benchmark, I'm in. Right? So like the top cortile of any asset class, generally I'm in. But I look at the base rates of of the S&P index, I look at the base rates of LBOS's today. I look at venture capital, I look at private credit, it's pretty tough out there. Like there's a lot of expensive assets. So I think that's the challenge. If you look back at finance for the last 100 years, you have all these companies. You have the markets trend towards a liquid liquidity efficiency and low cost tight bid ass spreads and you know like it's the you know marvel of the world the US capital markets right it's odd to me that we're now shifted to a world where assets are staying private bid ass spreads are wide the fees are high and I don't know how or when it all plays out but in the fullness of time hopefully in my career we'll see a change where I think these markets merge somehow and I think interval funds are first step in that direction secondary funds what I think is going to be interesting over the next three, five, seven years is parts of Asia, Japan, you know, Japan, Korea could be interesting. Like there's parts of the VC world that I think are pretty interesting. There's no money in biotech. It's harder to raise money in the active equity space. Hard to raise money in the private equity space. Like it's hard to raise money in a lot of areas. And so you're going to see opportunities as as a lot of these private companies have to find ways into the market. What I hope is going to happen is that I think you'll see a number of younger smart managers who would have been in the hedge fund world start longies at lower fees. that'll make that opportunity set richer and I think people will focus more there. But I think it's the world's pretty frothy right now. Pretty expensive. >> All right, Adrian, I want to make sure I get a chance to ask you a couple closing questions. What is your favorite hobby or activity outside of work and family? >> My two passions in life are my family and business and I've kind of oriented my life to spend time there and it crowds out other things. But one thing I do have a passion for are romcoms. And so I'll die on the hill that romantic comedies are criminally underrated and and you know I you look at these like Rotten Tomato ratings 25 30% it seems crazy to me like I'll I've never seen one I don't like. I just think they're mood enhancing right? So if you think about it you you click play you know the world stands still. Everything's a little quiet. My brain shuts down. A smile comes across my my face because I know it's going to have a happy ending. >> That's great. Which two people have had the biggest impact on your professional life? >> So I think my father's love of business and my parents love of a good deal impacted my life. The founder of Eagle, Ravenel Curry gave me enormous opportunities and trust at a young age for which I'll forever be grateful and kind of changed my life. And he's just a terrific entrepreneur and long-term thinker. So it's been wonderful to spend so many years with him. But the person by far who's um impacted my life on a business sense is my partner Alec Henry. So I met Alec almost a couple decades ago in the investment world and we've been talking daily or almost daily ever since and we talk about everything from you know hey financial markets to the psychology of sales to are cold plunges actually healthy right it's everything and what I'll tell you about Alec is he's brilliant is has a you know very sharp he's curious he's kind and he's one of these people that always does the right thing and if you surround yourself by with somebody like Alec it can't help but bend you in the in a good direction. I I like to think he's had that impact on me. If you find somebody that you respect, that you have mutual admiration for, and you like to get to the answers of things and debate things, and you can do it behind closed doors, the amount you can learn is off the charts, and it's even a little bit better than that, Ted. So, Alec is articulate and concise. So, he says really smart things very quickly. So when we talk, I learn a lot, but I also get to speak more than half of the time. So we call that a twofur. >> What brings you the greatest joy? >> It's by far putting my 10-year-old daughter Maisie and 5-year-old daughter Cali to bed. And you know, it's the time of day where the house is quiet, everything slows down. They are so chatty and hilarious and goofy, and we're goofy together and dancing and singing and playing pranks and, you know, reading or what have you. And so what if bedtime takes an hour, right? And the most fun part of it all is when we push just long enough that my wife, who is the most patient human being I've ever met, turns her head at me and and looks at me a little bit and says, "Adrian, are you ready for some constructive criticism? I think you could use some help with your bedtime skills." I say, "The only thing better than one daughter is having two." And I I think I'll always remember the bedtimes, and I hope they do, too. What's a mystery you wonder about? >> I wonder about all the normal stuff, you know, like are we in a simulation afterlife? Who how are the pyramids built? You know, all that stuff. >> I'm in wonderment. I often think about how my life could have ended up very similarly to this growing up in different states or different colleges or different first jobs or what have you. And but these two most valuable things in my life, my children, how a very specific pattern of events had to play out for them to be here. And I think and wonder about that. But if you really want to know the answer to this, like what if I'm sitting on my bed at night like rolling around? I wonder about things like how many non-alcoholic beers can I have be per alcoholic beer before the placebo effect wears off. I wonder, you know, whenever I go to a white elephant gift exchange party, why people are the worst versions of themselves. I wonder, you know, I think about a lot like what a high percentage of a dress shirt's total cost to spend on dry cleaning. And then when I go back to Texas, I wonder, you know, I don't want to betray my roots, like I wonder why people think line dancing is fun. And I also wonder on the way why people think word finds are fun on the plane. >> All right, Adrian, last one. How's your life turned out differently from how you expected it to >> glitter. Lots and lots of glitter and stuff. You had so so much stuff. Amazing. Cali loves stuff. And so, look, I didn't expect any of this. And I just remember the the goofy teenager who was, you know, immature and comically competitive and had a subwoofer in his car and had a shrine to Michael Jordan and sold Cutco knives and worked at the local shoe store for minimum wage. I had a lot of room for improvement. I met my wife Jennifer when I was very young at waiting tables at a moderately priced Mexican restaurant in Texas and it was love at first sight for me. And so we, you know, we didn't have any money back then. I remember we would go to Sam's Club to buy calling cards to call each other because cell phone minutes were so expensive or we would pull money to visit each other. And so getting to grow up with somebody who's as wonderful as her who offers you relentless emotional support from a young age and is your biggest fan, you know, you can't replace that. I don't think I'd recommend it to people like date marrying somebody you date so so early. It just doesn't make mathematical sense, right? But if you do and you get it right, there's just a la palooa to it. And the way I describe it to people is you, you know, sometimes our two daughters, you know, do something and it just makes us smile and we don't say anything and we look at each other and and I think what we're both thinking is, gosh, this really worked out in the end. Like, how cool. And so, I would never expected to find my spouse and my kind of my soulmate so young. I would have never expected to only have two jobs after college so far and be afforded unusually good opportunities at a young age. I would never have expected to live in the Northeast. And if I think about it all, you know, I I would it's very unusual in life to be able to spend your life time at home and at work with people you love and admire. And for that, I'm truly grateful. >> Adrian, thanks so much for sharing your insights. >> Thanks for having me, Ted. [Music]