Ares Management's CEO on Public Markets, Private Equity, and More | At Barron's
Summary
Company Overview: Ares Management, founded in 1997, manages nearly $600 billion in assets across private equity, real estate, infrastructure, and private credit, capitalizing on the growth trend in private markets.
Public vs. Private Markets: Ares Management has a unique position with significant growth in both private and public markets, emphasizing the importance of simplifying complex industry roles for investors.
Market Insights: The public equity markets are considered fully valued, with a concentration in market cap and challenges for active investors due to the rise of passive investing and algorithmic trading.
Democratization of Private Markets: The firm supports increased access to private market investments for individual investors, highlighting the importance of governance and investor education.
Sports Investments: Ares has expanded into sports investments, offering non-correlated returns and opening up opportunities for institutional and retail investors to own stakes in sports teams.
University Endowments: University endowments, facing financial pressures, are exploring secondary markets for liquidity, demonstrating the durability of private market investments.
Growth Strategy: Ares aims to double its assets under management by maintaining a growth rate of 16-20% per year, supported by a long-term business plan and five-year guidance.
Transcript
[Music] Mike. So, um, we're following Jane Goodall, right? >> That's a that's a tough act to follow. >> No more monkey business. >> Talk about private equity saving the world, right? >> Yeah, exactly. Okay, that wasn't so good. Um, all right. Um, hello everyone and welcome to At Barrens. My name is Andy Sir. I'm the editor at large at Barren and this is an interview with Michael Aragetti who is the CEO of Aries Management. Mike, great to see you. >> It's great to be here. Thank you. Thanks for the invite. >> Um, so for those of you who aren't familiar with Aries, Mike, why don't you give them an idea about what the firm is all about? >> Sure. So, the firm was founded in 1997. Uh today the firm is close to $600 billion of assets under management in what broadly uh the markets define as alternatives or said differently private markets investing. Uh we have marketleading businesses around the globe in private equity, real estate, infrastructure, private credit uh and have really been enjoying a secular growth trend that's happening in private markets as well as I think a couple things that we've done well to to capitalize on that trend. Uh we have about 4,000 employees in 40 offices in 20 countries around the globe. Uh and so I think that positions us uniquely to, you know, have a lens into the real economy on on a global basis. >> Yeah. I mean, you can make the argument that your firm is a little lower profile than KKR or Blackstone. On the other hand, for those of you who follow the markets, Aries stock has been the top performer in the sector. Yep. And you also have a higher valuation than these other guys. What do you attribute that to? >> Management. Yep. That's what you call >> strong management. >> Biggest softball question. Okay. How come your socks up? Couldn't be. You know I phrase it that way. >> You know, it's funny because I before I became the CEO of Aries Management, I was actually the CEO of our uh publicly traded business development company, Aries Capital Corporation, and ran that company for a decade before moving up to the to the parent. So in fact we actually had a subsidiary company that was public and growing before we IPOed the the parent. Um I think what I learned and and it's reflecting the valuation being in the public markets is fundamentally different than being in the private market. So it's always I don't want to say awkward but interesting for us as private markets practitioners to also have this you know large growing profile in the public markets. I think the key differentiators for us and what we've tried to do is simplify a complex industry um so that people understand the role that we play in the global economy what trends are driving the growth and I think that's critical for success in the public markets right you you you touch so many different individual and institutional investors and articulating just in very plain terms who you are what you do why you do it and and why they should be affiliated with you. Uh and second, we've tried to be very clean in the financial profile of of the business. And what I mean by that is we are a pure play asset manager. We manage capital for the largest sovereign wealth funds, pension funds, insurance companies on the planet, but we also manage money for hundreds of thousands of individual investors. Um and that's the core business. And I think a lot of our peers have changed the business model over time to be insurance heavy or balance sheet heavy. And I think it's it's gotten a little confusing. So we focus on keep it simple, execute on the core strategy, and then make sure that we're growing consistently because I think, you know, as a as a set of professional investors, the ability to underwrite a business plan and consistent performance is always key. And if you look at Aries as a as a firm, we've grown roughly 25% compound annually for the last 25 years in every market and I think you know in the public markets particularly in a world where attention span is shortening by the day just that consistency and predictability I think has been a big underpinning of the value. >> It's interesting you're saying you got this one foot in the private markets, the other one in the public markets. That's changing. We're going to get to that in a second, but I have to ask you about the public markets. What do you think? Whoa. >> Well, that's that's what you Okay. >> You scared me talking about the public markets. >> Well, I'm going to scare you even more. What do you think about this crazy stock market with these crazy valuations right now? >> Yeah. You know, so I I have the benefit of not having to invest in the public markets and having been in in and around them for 30 plus years in my career. Now I think it's getting harder to differentiate as an active investor in the public markets. You've seen uh cutting in half of the number of public companies in the last 25 years. You've seen a significant concentration in market cap in the top you know in the top 10. Uh you've seen the advent of passive investing algorithmic trading uh changing of the economics of research and intermediaries. So the structure of the market I think just makes it really really difficult to generate alpha and you can see that even over the last decade traditional public equity managers are are are having a hard time growing their flows because people want to buy beta exposure. Um so I'm a big big believer in owning equities and compounding wealth over a long period of time but I think it's getting very very difficult to be an individual stock picker. So, what do I think? I think the public equity markets today are fully valued. I don't want to say that they're overvalued. Um, I think that they are fully valued. I think they're reflecting this concentration uh of market cap. Um, it's reflecting a a change in the discount rate. And obviously there's a big uh wave of enthusiasm that's running through the markets right now around the technology sector, the AI revolution and and the productivity gains. And I I could get behind that as a catalyst for value, but they're not cheap. Let's put it that way. At these at these value multiples, they're, you know, obviously well in excess of historical averages. And you know, that that's always cause for concern, >> right? So, if you think what Aries invests in is maybe esoteric, too sophisticated for your pallet, um, not something you're going to be interested in, you're wrong because the world of private markets is coming to public investors. It's coming to your 401k. Increasingly, you're getting access to it. So, I want to ask you about this democratization, if you will. The SEC just had an advisory group meet and talk about new guidelines. ordinary investors are going to be investing in those investments that you have. How do you feel about that? And can it be done? Should it be done? >> Yeah, look, I I putting aside that we will benefit from the growth in that. I I feel great about it because I don't understand why a large institution should have access to a differentiated investment and an individual shouldn't. And so without calling it democratization but just increasing access and choice for individual investors with appropriate governance I think is always a good thing. Um and I think innovation in the financial markets generally has been positive for the investment community. So I'm a big believer in that. Uh I also remind people that most of you in this room or listening to this podcast have access to alternatives in other parts of their lives whether it's your mortgage or uh your pension plan. So this this idea of 401ks revolutionizing access I think is a little bit of a misconception because most large state plans, insurance companies, they're all investing in alternatives in a very large and diversified way. So it's not as though this is the first exposure people are going to get. But this will be the first time that individual investors will have the opportunity in their retirement plans to opt into these investments. And I think with the right structures, I think it's great for the investor. But how do you respond to people who say, "Oh yeah, they're coming to retail markets because now the institutional markets are totally saturated. So where else are they going to go? Now they have to sell it to all the MPA kettles of the world out there." >> Yeah, I've heard I' I've heard that many times articulated and I I I don't know who's propagating that, but it's >> probably the media. >> Yeah, usually blame the media. >> It's fake fake news. Um >> I think look anytime you go from institution to retail people get anxious about risktaking. Um so investor protection investor education has to be prominent in this conversation but there is no reality that I see where lower quality assets find their way to the retail investor because the institutional investor is is saturated. Um I have been I don't want to say dampening the broader enthusiasm for this trend for that reason which is to say the market is not short on demand for private markets assets. >> The market is short on the ability to create private market assets for people to invest in. And so it's great that we continue to open up these new distribution channels and insurance and wealth 401k plans, but the the constraint to growth and the proliferation of alts is the ability for folks like us to actually create new assets, build new apartment buildings, build data centers, buy companies, and all package, you know, consumer loans and all of these things. So I think it will diversify the the the funding sources but I don't think it's going to overwhelm the you know traditional institutional business. >> Have you guys made any inroads because some of your cohort institutions have already put stuff out and done partnerships. >> Yeah, we we have retail distribution. >> We have and I think you know that's a big part of the conversation now is it's it's fascinating. So when we went public gosh almost 15 years ago the alternative asset managers in the public market were trading at a deep discount to the traditional asset managers. >> Mh. >> Um and part of the narratives that we were talking about was convergence. And what we meant by convergence was not that traditional assets become alternative and alternative become traditional but that the the consumer whether it's retail or institutional will want to buy liquid and illquid exposures in one place. Um and that's now finally coming to fruition. But ironically the valuation has flipped because the growth and the differentiation is now on the alternative side. >> That is that is fascinating. I hadn't really that hadn't crystallized in my mind, but that's absolutely true because they've had the outflows and out of a tough time. >> I think when we when we came public, they were probably trading an index basis at 18 times earnings and the alts were maybe close to half that. And if you look at the alts index today, they're probably in the low 20s and the traditionals are probably half that. So there's been a complete >> complete reversal which is it's only been 10 plus years. That's a transformational shift. One of the most exciting, albeit kind of small parts of the private space, but it gets a lot of attention is sports. And you're involved in the world of sports. You're a part owner of the Baltimore Orioles along with another private equity guy, David Rubenstein from Carlile. Um, so I'm curious about but but but to the point of uh access to investors, there's a lot of talk about alternative managers like yourselves buying pieces and then again making them available to institutional and retail investors. So you could own a piece of the Dallas Cowboys. No, not that one. That Jerry Jones, forget it. And I don't know if you'd want to here. We're in New York. But um >> maybe the Giants, some of the Jets. No, but you you see what I'm saying? >> I do. Okay. So but that that access is is a fascinating example of how the private market opportunity continues to expand. So precoid the structure of sports investing at least in the major US leagues and global leagues was bank capital largely supported by league guarantees and rich people and there was zero innovation in the capital structure. There was no flexibility around how you would finance and grow these enterprises and there was a strict prohibition on institutional capital investment. When COVID hit and we were a big part of the the solution here, you had a lot of team owners and leagues that were now struggling for liquidity because you had stadiums and arenas with no live events and you were assetri in the sense that you had these really valuable franchises but no cash. And so that started to create a series of conversations with with us and owners and leagues to say, how do we actually innovate capital structures here? It can't be that it's only banks and rich people. If we want to actually get through this and have uh sports investing accelerate again, we've got to be more creative. And we did a lot of missionary work and a lot of relationship building to allow institutional money to come into these these markets. And you fast forward now 5 years since the pandemic and each of the major sports leagues in the country to varying extents with varying degrees of flexibility are now open to international uh institutional investment. And if you take the NFL as an example, you mentioned you know the Giants. The Giants just sold uh a minority position to institutional capital. We made a minority investment in the Miami Dolphins and their surrounding assets. But we also because of our access to the individual investor are able to offer that exposure up. Now you may say other than the fact it's really cool if you're a sports fan that you get to own a piece of the Dolphins or you know Inter Miami or Atletico Madrid or McLaren Racing which are all the things that we own. When you look at what sports assets do relative to other things you own, completely non-correlated outcomes relative to a traditional 60/40 portfolio and have compounded at close to 15% rate of return for the last 15 years. So, but 5 years ago uninvestable. 5 years later, you have a multi-t trillion dollar market that has now opened up to institutional and and retail investment. And again, I think that's a that's a really good thing for the investor with all of the appropriate, you know, structures and protections. >> It's a fascinating point about COVID being sort of something that triggered this to a degree. I hadn't realized that. The other thing is of course all this new capital. What has it done to valuations of these teams, >> right? Because all of a sudden new money can come in and we've seen what's been going on with some of these sales and the pieces. Yeah. Look, there's a scarcity value element to it. A lot of people used to say that sports teams were a store of value and that thesis wasn't tested until now and you really do see it that the fact that there's just a limited number of these assets and you have now a lot of liquidity wanting to invest in them, it should should help fundamental values for sure. >> I want to shift gears and ask about another what I think is a really fascinating part of our world that touches what you do which is university endowments. And wow, my goodness, we've seen all the headlines about the headwinds facing universities. A lot of them have a lot of money invested in private equity. Now, they need cash and it's hard to get liquidity out of those. Your alma mater in particular, Mike's a Yale, and Yale's famous for Dave Swenson, who sort of invented the university model of the Swenson model of going big into private equity. Um, and then people are saying that, you know, Yale's got a difficult time. You may beg to differ on that. If you have any insight there, but what's the situation right now with university endowments and private equity? >> Yeah, look, I think um without getting into Yale specifically, but it it is public that Yale among other endowments have actually been looking at the secondary markets to get liquidity. I think more to risk manage in the current environment than because they're under any you know meaningful duress. Um but if you take the combination of reduction in NIH and research funding, an increase in the endowment tax, a reduction in international students which tend to you know pay higher tuition rates uh to support financial aid. A lot of large universities, public and private, are just, you know, dealing with a new paradigm. Um, and I think those that are forward thinking are liquidity planning because they don't know what the what the future holds. Um and again I think what what I find interesting about the university endowment model the argument was always you can generate meaningful outperformance by investing in private markets which David Swenson demonstrated you know handily but the risk was that there was ill liquidity and that there would come a day where that would be detrimental and I think by selling assets into the private market through secondaries at fair values I think was a demonstration of the durability of these private market exposures that the endowments are taking. So I think the the anxiety in that part of the market at least as we're experiencing it as a counterparty to many of them is probably lower than it was you know four or five months ago when when the world just felt a little bit less certain. >> Yeah. And that secondaries market is just another huge growing part of the business to open up liquidity for not just the endowments but for you guys. And then there funds created from those secondaries that again retail investors are going to have access to. >> Yeah. In many respects it's creating liquidity in illquid markets which allows for continued growth in in privates. Right. Because again the the the the premise of investing in the private markets is you accept illiquidity and duration to get higher rates of return. I've always felt that the public markets that we pay too much for liquidity because at least my own experience has been you don't want liquidity when it's plentiful like everything's going up. you just want to ride it up and the minute that you want to get your money back there's no liquidity and you don't want to sell at the value that liquidity is available. So in the public markets I think it's always been a little bit of a mirage and if it's there it's not there at a price that you want. So if you can afford to take the liquidity and it's not for everybody but if you can afford to take it you will generate excess return compounding over long periods of time and secondaries is just giving you you know one more degree of flexibility to capture that return >> and final question Mike you said I believe that you want to double the size of the firm or aum um correct me if I'm wrong but how do you intend to do that >> yeah so the the good news like I said we have track record over many decades now of growing at, you know, meaningful double-digit rates of return. And so when you say we're going to double every four or five years, it sounds quite quite significant, but the math is the math and we're actually growing at a rate of return that would have us doubling quicker than that. Uh, one of the maybe bringing it full circle, one of the things I think that is underpinning our valuation and attractiveness as a public company is we we put out guidance. Mhm. >> Um, typically put out five-year guidance, which is quite unique for public companies who typically will put out a year of guidance with quarterly revisions. >> Do you think President Trump's right about getting rid of quarterly? >> I I do actually. Um, I do. I think it's very very difficult to stick to a long-term business plan and articulate uh success along that path if every 90 days you're having to to communicate. So, I think you could you can get to a similar outcome with a reduced disclosure regime, but the the amount of dollars, energy, um, management attention, board attention that just goes into the quarterly reporting processes is a lot. Um, but anyway, the 5-year guidance, we're out with 5-year guidance that says we expect to be $750 billion plus of AUM, growing the company 16 to 20% per year, and we're we're well on our way to that. So yeah, I still have confidence in it. >> All right, ladies and gentlemen, please join me in welcoming and thanking again. We appreciate it. Thanks for spending time with me. Thank you. Thanks. Thanks.
Ares Management's CEO on Public Markets, Private Equity, and More | At Barron's
Summary
Transcript
[Music] Mike. So, um, we're following Jane Goodall, right? >> That's a that's a tough act to follow. >> No more monkey business. >> Talk about private equity saving the world, right? >> Yeah, exactly. Okay, that wasn't so good. Um, all right. Um, hello everyone and welcome to At Barrens. My name is Andy Sir. I'm the editor at large at Barren and this is an interview with Michael Aragetti who is the CEO of Aries Management. Mike, great to see you. >> It's great to be here. Thank you. Thanks for the invite. >> Um, so for those of you who aren't familiar with Aries, Mike, why don't you give them an idea about what the firm is all about? >> Sure. So, the firm was founded in 1997. Uh today the firm is close to $600 billion of assets under management in what broadly uh the markets define as alternatives or said differently private markets investing. Uh we have marketleading businesses around the globe in private equity, real estate, infrastructure, private credit uh and have really been enjoying a secular growth trend that's happening in private markets as well as I think a couple things that we've done well to to capitalize on that trend. Uh we have about 4,000 employees in 40 offices in 20 countries around the globe. Uh and so I think that positions us uniquely to, you know, have a lens into the real economy on on a global basis. >> Yeah. I mean, you can make the argument that your firm is a little lower profile than KKR or Blackstone. On the other hand, for those of you who follow the markets, Aries stock has been the top performer in the sector. Yep. And you also have a higher valuation than these other guys. What do you attribute that to? >> Management. Yep. That's what you call >> strong management. >> Biggest softball question. Okay. How come your socks up? Couldn't be. You know I phrase it that way. >> You know, it's funny because I before I became the CEO of Aries Management, I was actually the CEO of our uh publicly traded business development company, Aries Capital Corporation, and ran that company for a decade before moving up to the to the parent. So in fact we actually had a subsidiary company that was public and growing before we IPOed the the parent. Um I think what I learned and and it's reflecting the valuation being in the public markets is fundamentally different than being in the private market. So it's always I don't want to say awkward but interesting for us as private markets practitioners to also have this you know large growing profile in the public markets. I think the key differentiators for us and what we've tried to do is simplify a complex industry um so that people understand the role that we play in the global economy what trends are driving the growth and I think that's critical for success in the public markets right you you you touch so many different individual and institutional investors and articulating just in very plain terms who you are what you do why you do it and and why they should be affiliated with you. Uh and second, we've tried to be very clean in the financial profile of of the business. And what I mean by that is we are a pure play asset manager. We manage capital for the largest sovereign wealth funds, pension funds, insurance companies on the planet, but we also manage money for hundreds of thousands of individual investors. Um and that's the core business. And I think a lot of our peers have changed the business model over time to be insurance heavy or balance sheet heavy. And I think it's it's gotten a little confusing. So we focus on keep it simple, execute on the core strategy, and then make sure that we're growing consistently because I think, you know, as a as a set of professional investors, the ability to underwrite a business plan and consistent performance is always key. And if you look at Aries as a as a firm, we've grown roughly 25% compound annually for the last 25 years in every market and I think you know in the public markets particularly in a world where attention span is shortening by the day just that consistency and predictability I think has been a big underpinning of the value. >> It's interesting you're saying you got this one foot in the private markets, the other one in the public markets. That's changing. We're going to get to that in a second, but I have to ask you about the public markets. What do you think? Whoa. >> Well, that's that's what you Okay. >> You scared me talking about the public markets. >> Well, I'm going to scare you even more. What do you think about this crazy stock market with these crazy valuations right now? >> Yeah. You know, so I I have the benefit of not having to invest in the public markets and having been in in and around them for 30 plus years in my career. Now I think it's getting harder to differentiate as an active investor in the public markets. You've seen uh cutting in half of the number of public companies in the last 25 years. You've seen a significant concentration in market cap in the top you know in the top 10. Uh you've seen the advent of passive investing algorithmic trading uh changing of the economics of research and intermediaries. So the structure of the market I think just makes it really really difficult to generate alpha and you can see that even over the last decade traditional public equity managers are are are having a hard time growing their flows because people want to buy beta exposure. Um so I'm a big big believer in owning equities and compounding wealth over a long period of time but I think it's getting very very difficult to be an individual stock picker. So, what do I think? I think the public equity markets today are fully valued. I don't want to say that they're overvalued. Um, I think that they are fully valued. I think they're reflecting this concentration uh of market cap. Um, it's reflecting a a change in the discount rate. And obviously there's a big uh wave of enthusiasm that's running through the markets right now around the technology sector, the AI revolution and and the productivity gains. And I I could get behind that as a catalyst for value, but they're not cheap. Let's put it that way. At these at these value multiples, they're, you know, obviously well in excess of historical averages. And you know, that that's always cause for concern, >> right? So, if you think what Aries invests in is maybe esoteric, too sophisticated for your pallet, um, not something you're going to be interested in, you're wrong because the world of private markets is coming to public investors. It's coming to your 401k. Increasingly, you're getting access to it. So, I want to ask you about this democratization, if you will. The SEC just had an advisory group meet and talk about new guidelines. ordinary investors are going to be investing in those investments that you have. How do you feel about that? And can it be done? Should it be done? >> Yeah, look, I I putting aside that we will benefit from the growth in that. I I feel great about it because I don't understand why a large institution should have access to a differentiated investment and an individual shouldn't. And so without calling it democratization but just increasing access and choice for individual investors with appropriate governance I think is always a good thing. Um and I think innovation in the financial markets generally has been positive for the investment community. So I'm a big believer in that. Uh I also remind people that most of you in this room or listening to this podcast have access to alternatives in other parts of their lives whether it's your mortgage or uh your pension plan. So this this idea of 401ks revolutionizing access I think is a little bit of a misconception because most large state plans, insurance companies, they're all investing in alternatives in a very large and diversified way. So it's not as though this is the first exposure people are going to get. But this will be the first time that individual investors will have the opportunity in their retirement plans to opt into these investments. And I think with the right structures, I think it's great for the investor. But how do you respond to people who say, "Oh yeah, they're coming to retail markets because now the institutional markets are totally saturated. So where else are they going to go? Now they have to sell it to all the MPA kettles of the world out there." >> Yeah, I've heard I' I've heard that many times articulated and I I I don't know who's propagating that, but it's >> probably the media. >> Yeah, usually blame the media. >> It's fake fake news. Um >> I think look anytime you go from institution to retail people get anxious about risktaking. Um so investor protection investor education has to be prominent in this conversation but there is no reality that I see where lower quality assets find their way to the retail investor because the institutional investor is is saturated. Um I have been I don't want to say dampening the broader enthusiasm for this trend for that reason which is to say the market is not short on demand for private markets assets. >> The market is short on the ability to create private market assets for people to invest in. And so it's great that we continue to open up these new distribution channels and insurance and wealth 401k plans, but the the constraint to growth and the proliferation of alts is the ability for folks like us to actually create new assets, build new apartment buildings, build data centers, buy companies, and all package, you know, consumer loans and all of these things. So I think it will diversify the the the funding sources but I don't think it's going to overwhelm the you know traditional institutional business. >> Have you guys made any inroads because some of your cohort institutions have already put stuff out and done partnerships. >> Yeah, we we have retail distribution. >> We have and I think you know that's a big part of the conversation now is it's it's fascinating. So when we went public gosh almost 15 years ago the alternative asset managers in the public market were trading at a deep discount to the traditional asset managers. >> Mh. >> Um and part of the narratives that we were talking about was convergence. And what we meant by convergence was not that traditional assets become alternative and alternative become traditional but that the the consumer whether it's retail or institutional will want to buy liquid and illquid exposures in one place. Um and that's now finally coming to fruition. But ironically the valuation has flipped because the growth and the differentiation is now on the alternative side. >> That is that is fascinating. I hadn't really that hadn't crystallized in my mind, but that's absolutely true because they've had the outflows and out of a tough time. >> I think when we when we came public, they were probably trading an index basis at 18 times earnings and the alts were maybe close to half that. And if you look at the alts index today, they're probably in the low 20s and the traditionals are probably half that. So there's been a complete >> complete reversal which is it's only been 10 plus years. That's a transformational shift. One of the most exciting, albeit kind of small parts of the private space, but it gets a lot of attention is sports. And you're involved in the world of sports. You're a part owner of the Baltimore Orioles along with another private equity guy, David Rubenstein from Carlile. Um, so I'm curious about but but but to the point of uh access to investors, there's a lot of talk about alternative managers like yourselves buying pieces and then again making them available to institutional and retail investors. So you could own a piece of the Dallas Cowboys. No, not that one. That Jerry Jones, forget it. And I don't know if you'd want to here. We're in New York. But um >> maybe the Giants, some of the Jets. No, but you you see what I'm saying? >> I do. Okay. So but that that access is is a fascinating example of how the private market opportunity continues to expand. So precoid the structure of sports investing at least in the major US leagues and global leagues was bank capital largely supported by league guarantees and rich people and there was zero innovation in the capital structure. There was no flexibility around how you would finance and grow these enterprises and there was a strict prohibition on institutional capital investment. When COVID hit and we were a big part of the the solution here, you had a lot of team owners and leagues that were now struggling for liquidity because you had stadiums and arenas with no live events and you were assetri in the sense that you had these really valuable franchises but no cash. And so that started to create a series of conversations with with us and owners and leagues to say, how do we actually innovate capital structures here? It can't be that it's only banks and rich people. If we want to actually get through this and have uh sports investing accelerate again, we've got to be more creative. And we did a lot of missionary work and a lot of relationship building to allow institutional money to come into these these markets. And you fast forward now 5 years since the pandemic and each of the major sports leagues in the country to varying extents with varying degrees of flexibility are now open to international uh institutional investment. And if you take the NFL as an example, you mentioned you know the Giants. The Giants just sold uh a minority position to institutional capital. We made a minority investment in the Miami Dolphins and their surrounding assets. But we also because of our access to the individual investor are able to offer that exposure up. Now you may say other than the fact it's really cool if you're a sports fan that you get to own a piece of the Dolphins or you know Inter Miami or Atletico Madrid or McLaren Racing which are all the things that we own. When you look at what sports assets do relative to other things you own, completely non-correlated outcomes relative to a traditional 60/40 portfolio and have compounded at close to 15% rate of return for the last 15 years. So, but 5 years ago uninvestable. 5 years later, you have a multi-t trillion dollar market that has now opened up to institutional and and retail investment. And again, I think that's a that's a really good thing for the investor with all of the appropriate, you know, structures and protections. >> It's a fascinating point about COVID being sort of something that triggered this to a degree. I hadn't realized that. The other thing is of course all this new capital. What has it done to valuations of these teams, >> right? Because all of a sudden new money can come in and we've seen what's been going on with some of these sales and the pieces. Yeah. Look, there's a scarcity value element to it. A lot of people used to say that sports teams were a store of value and that thesis wasn't tested until now and you really do see it that the fact that there's just a limited number of these assets and you have now a lot of liquidity wanting to invest in them, it should should help fundamental values for sure. >> I want to shift gears and ask about another what I think is a really fascinating part of our world that touches what you do which is university endowments. And wow, my goodness, we've seen all the headlines about the headwinds facing universities. A lot of them have a lot of money invested in private equity. Now, they need cash and it's hard to get liquidity out of those. Your alma mater in particular, Mike's a Yale, and Yale's famous for Dave Swenson, who sort of invented the university model of the Swenson model of going big into private equity. Um, and then people are saying that, you know, Yale's got a difficult time. You may beg to differ on that. If you have any insight there, but what's the situation right now with university endowments and private equity? >> Yeah, look, I think um without getting into Yale specifically, but it it is public that Yale among other endowments have actually been looking at the secondary markets to get liquidity. I think more to risk manage in the current environment than because they're under any you know meaningful duress. Um but if you take the combination of reduction in NIH and research funding, an increase in the endowment tax, a reduction in international students which tend to you know pay higher tuition rates uh to support financial aid. A lot of large universities, public and private, are just, you know, dealing with a new paradigm. Um, and I think those that are forward thinking are liquidity planning because they don't know what the what the future holds. Um and again I think what what I find interesting about the university endowment model the argument was always you can generate meaningful outperformance by investing in private markets which David Swenson demonstrated you know handily but the risk was that there was ill liquidity and that there would come a day where that would be detrimental and I think by selling assets into the private market through secondaries at fair values I think was a demonstration of the durability of these private market exposures that the endowments are taking. So I think the the anxiety in that part of the market at least as we're experiencing it as a counterparty to many of them is probably lower than it was you know four or five months ago when when the world just felt a little bit less certain. >> Yeah. And that secondaries market is just another huge growing part of the business to open up liquidity for not just the endowments but for you guys. And then there funds created from those secondaries that again retail investors are going to have access to. >> Yeah. In many respects it's creating liquidity in illquid markets which allows for continued growth in in privates. Right. Because again the the the the premise of investing in the private markets is you accept illiquidity and duration to get higher rates of return. I've always felt that the public markets that we pay too much for liquidity because at least my own experience has been you don't want liquidity when it's plentiful like everything's going up. you just want to ride it up and the minute that you want to get your money back there's no liquidity and you don't want to sell at the value that liquidity is available. So in the public markets I think it's always been a little bit of a mirage and if it's there it's not there at a price that you want. So if you can afford to take the liquidity and it's not for everybody but if you can afford to take it you will generate excess return compounding over long periods of time and secondaries is just giving you you know one more degree of flexibility to capture that return >> and final question Mike you said I believe that you want to double the size of the firm or aum um correct me if I'm wrong but how do you intend to do that >> yeah so the the good news like I said we have track record over many decades now of growing at, you know, meaningful double-digit rates of return. And so when you say we're going to double every four or five years, it sounds quite quite significant, but the math is the math and we're actually growing at a rate of return that would have us doubling quicker than that. Uh, one of the maybe bringing it full circle, one of the things I think that is underpinning our valuation and attractiveness as a public company is we we put out guidance. Mhm. >> Um, typically put out five-year guidance, which is quite unique for public companies who typically will put out a year of guidance with quarterly revisions. >> Do you think President Trump's right about getting rid of quarterly? >> I I do actually. Um, I do. I think it's very very difficult to stick to a long-term business plan and articulate uh success along that path if every 90 days you're having to to communicate. So, I think you could you can get to a similar outcome with a reduced disclosure regime, but the the amount of dollars, energy, um, management attention, board attention that just goes into the quarterly reporting processes is a lot. Um, but anyway, the 5-year guidance, we're out with 5-year guidance that says we expect to be $750 billion plus of AUM, growing the company 16 to 20% per year, and we're we're well on our way to that. So yeah, I still have confidence in it. >> All right, ladies and gentlemen, please join me in welcoming and thanking again. We appreciate it. Thanks for spending time with me. Thank you. Thanks. Thanks.