listeningin Profiting From Uncertainty€¦ · “You Can Be A Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits” in 1999, he was pretty much single-handedly

Uncertainty. It’s hard to remember already, but thatwas the dominant trope in the market even beforeTuesday’s election upended much of what the chat-tering class (manifestly including me) thought theyknew about this fair land’s economic and politicaloutlook.

Which is why I was drawn to interviewing thisweek’s dynamic duo, the father-son team of Markand Jonathan Boyar at their eponymous BoyarValue Group. Just a month or so ago, they issued athought-provoking piece of in-depth investmentresearch, modestly entitled, “Boyar’s Guide toProfiting From Uncertainty.”

Mark, is an iconoclastic value investor of the oldschool whom I have known, well, forever. Incrediblyprecise, detailed and thoughtful in his research, he’sstubborn enough to hold onto his painstakingly vet-ted ideas until they bear fruit. Mark has been asecurities analyst since 1968 and has been activelymanaging money since 1975 — accumulatingreams and reams of clippings of interviews inBarron’s and all the rest of the financial media-sphere over the years. Not to mention a money man-agement record that has created great loyaltyamong his clients.

Jonathan, trained as a lawyer but a finance afi-cionado at heart, I only met recently. But he’s beenworking in the family firm since 2008 — after someearly tutelage under Mario Gabelli — and seems asmuch a born value guy as his old man.

The two are convinced they’ve found an enduring edgein scooping up quality assets when they are temporari-ly tossed on the bargain counter by the ebb and flowoutrageous fortune. Since we’ve seen a lot of that late-ly, seems a good idea to listen in. — KMW

RESEARCH SEE

DISCLOSURES PAGE15

V O LUME 5

I S S U E 1 7

NOVEMBER 11, 2016

INSIDE

WELLINGONWALLST. November 11, 2016 PAGE 1

Listening InSpotting

Overlooked AssetsIn QVC, Brinker &Franklin Resources

Guest PerspectivesLouis Gave

When Elites FailMark McKinney

I Did Nothing, AndIt Was Everything IThought It Could Be

Paul Kasriel Fed Tightening? It’sHappened Already Borthwick & TroiseIrrational InvestorsGiffen Goods,Tulips & Bears

Chart SightingsVerrone & SohnEarthquake TakeawaysWoody Dorsey

Volatile Ranging

Deep DivesJeremy Grantham

Ben Inker

Acute ObservationsComic SkewsHot Links

ALL ON WEBSITE

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listeninginProfiting From UncertaintyMark Boyar’s Group Finding Mispriced Financials, Media Stocks

Mark Boyar

Jonathan Boyar

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Jonathan, I have to say I felt like I was ina time warp as I read Boyar Research’s“Guide to Profiting from Uncertainty.” Atightly argued investment thesis accom-panied with detailed fundamental analysisof a number of stocks is a real throwback. JONATHAN BOYAR: Yes, it seems that we’re adying breed, but all this passive investing, I sus-pect, will eventually giveus an opportunity toactually take advantageof the forgotten skill setthat is fundamentalvalue analysis.

I know from daysgone by that yourdad’s skill at spot-ting fundamentallyundervalued valuestocks establishedhis reputation in thebusiness, but bringme up to date —what exactly is theBoyar Value Groupdoing these days?JONATHAN: Right, theBoyar Research part ofthe firm was started in1975 — we think we’rethe oldest continuouslypublished institutionalresearch service on WallStreet. We have a terrif-ic client base that readsus — from hedge fundsto mutual funds to fami-ly offices. Anyone whocan afford to be patientand has a value focus. Our research business hasundergone significant growth over the last coupleof years, really just due to basic marketing. Wehave a terrific team of four full-time analysts. Wetell them they’re paid to read and come up with ideasand they haven’t disappointed thus far. We areagnostic to market cap, we’re agnostic to industryand we write reports on any of them.

Agnostic to market cap? Your institution-al clients don’t pay you for ideas aboutcompanies too small for them to invest in,do they? JONATHAN: No, but because we have been findingsuch terrific values in micro cap land, we startedpublishing a separate service in 2010 just dedicat-

ed to micro caps. While we recognized that our larg-er clients obviously couldn’t buy a $500 million com-pany in any sort of meaningful way, other investorshave more flexibility, so it’s a viable niche.

Then the second part of our business is BoyarAsset Management, which my father started in1983. We have roughly $200 million in separately

managed accounts aswell as a small limitedpartnership and a mutu-al fund, Boyar ValueFund (BOYAX), that’sbeen around since 1998.But the majority of ourbusiness is in bread andbutter separately man-aged accounts, eitherfrom high net worthindividuals, familyoffices or some institu-tional accounts.

It’s a constantlyrepeated truismthat the marketshate uncertainty —probably becausewe’re awash in it —so what advantagedo you see in stak-ing the contraryclaim and trying toprofit from it? JONATHAN: There’s nodoubt that we’re sur-rounded by uncertainty,and not just in the polit-ical arena. The financialmarkets have been send-ing out lots of conflicting

signals, with domestic equity markets bouncingaround highs but with few signs of the euphoriaamong retail investors that often marks tops. Theinternational arena is tenuous, pretty much wher-ever you look. There’s no escaping that uncertaintyis just part of the human condition — but we thinktop-down uncertainty results inevitably in attractiveinvestment opportunities — because pockets of themarket where controversies hold sway are fertilehunting grounds for undervalued equities.

Why do you think that is?JONATHAN: I think the best place to look for thatanswer is in behavioral finance and the working ofthe human brain. Actually, the truism you cited,

“Patience is probablyone of the most

important elements of stock market

investing. First, youhave to find

the great business at a good price, thenyou have to have

patience, the fortitudeand the ability

to withstand gyrationsin the stock market.That element is

critically important.”— Mark Boyar

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about the market hatinguncertainty more thanany known negative, isall one really has toknow to understand whyvalue investing works.Where uncertainty ispresent, there will befewer analysts doingdeep fundamentalresearch, resulting inpricing inefficiencies.

Okay. But that’s oldnews. Why hasn’tthat opportunitybeen arbitragedaway?JONATHAN: Good ques-tion. After all, when JoelGreenblatt published,“You Can Be A StockMarket Genius: Uncoverthe Secret Hiding Placesof Stock Market Profits”in 1999, he was prettymuch single-handedly responsible for a noticeableshrinkage in bargains available in spinoffs. As hisbook became required reading in the Street, mar-gins of safety in spinoffs narrowed markedly. Thething is, we don’t think talking about uncertaintycreating valuation discrepancies can spoil theadvantage of value investing because of somethingfundamental in the way the human brain is wired.

Go on —JONATHAN: Basically, neuroscience has found thatthe brain is like a pattern-recognition machine thatis constantly trying to predict the near future; itcraves certainty so that it can make predictionswhile conserving energy. If it can’t make predic-tions, the brain has to use dramatically moreresources involving the more energy-intensive pre-frontal cortex, and even a small amount of uncer-tainty generates an “error” in the orbital frontalcortex. This is sort of like having a flashing printericon on your desktop when paper is jammed — theflashing can’t be ignored and until it is resolved,it’s hard to focus on other things. By contrast, any-thing that creates a sense of certainty in the brainis rewarding — it generates an increase indopamine levels in the brain, which is a rewardresponse.

And this has what to do with value invest-ing?

JONATHAN: Well, you know the Buffett line about“be fearful when others are greedy, be greedy whenothers are fearful?” Why is that so hard to do, ifinvestors could follow Greenblatt’s advice to payattention to spinoffs? It turns out that the braincraves certainty using similar circuits as when wecrave food and other primary rewards. Informationis rewarding and uncertainty about the future setsoff a strong threat response, a type of pain to beavoided.

Which has led some to speculate thatBuffett, among others, is a sociopath — orthat his brain is wired differently. JONATHAN: Yes, but our research leads us to thinkthat Buffett’s brain isn’t wired differently — hesimply uses it differently, creating an advantage forhimself when others become paralyzed by uncer-tainty. What if he focuses instead on an empower-ing reward response? By finding wide moat busi-nesses whose stocks are on the bargain counter dueto the uncertainty, he puts his mind in a pleasur-able state of certainty because he knows he hashistory and data on his side supporting the outper-formance of wide moat businesses through crisesand beyond.

Actually, he said as much in Berkshire Hathaway’s1994 shareholder letter, if I can find it here:“We will continue to ignore political and economicforecasts, which are an expensive distraction for

Subscribe toWellingonWallSt.Please contact:

Stuart [email protected]

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many investors and businessmen...Indeed, we haveusually made our best purchase when apprehensionsabout some macro event were at a peak...If we canidentify businesses similar to those we have pur-chased in the past, external surprises will have littleeffect on our long-term results.”

Still, it’s no mean feat to concentrate onlong-term rewards, when all around you,Henny Penny is shouting that the sky isfalling —JONATHAN: Absolutely, the brain was wired for phys-ical survival, and we can’t change that. But astuteinvestors need to be aware of that, and try to usetheir brains to their advantage. Since that’s not easy,however, we don’t expect a substantial portion ofinvestors will ever adopt the change of focus that hasallowed Warren Buffett to become extraordinarilywealthy — and we expect uncertainty to continue toserve up wide moat businesses trading at substantialdiscounts to intrinsic value for us to invest in.

I should have asked earlier, when did youjoin the family business? JONATHAN: My timing was terrific — in 2008. Ihad I started my career working for Mario Gabelli,which was a great learning experience. He’s one ofthe smartest guys you’ll ever meet. Seeing how hedid things was definitely eye-opening. Their styleis a little bit different than what we do, but there’smore than one way to skin a cat. But then, I made Iguess my biggest professional mistake — I decidedto become an attorney.

You didn’t like law school? JONATHAN: Well, I graduated from Cardozo Schoolof Law and went to work as a litigator for a while in abig firm, but found that I either didn’t like the pro-fession or didn’t like what I was doing. So I ended upworking for my father — who had greatly discour-aged me from joining his firm. Against his betterjudgment, I guess, he let me do so, and here I am,almost eight years later.

Are you two still speaking? JONATHAN: Still speaking. I think we’re havingThanksgiving together and do all sorts of familythings. Family businesses have their own uniqueset of issues but it’s been great. We both love whatwe do and it’s a great way to make a living.

Come on. Practicing active money man-agement — as value investors?Investment dollars are fleeing the space.JONATHAN: Yes. Though we haven’t felt that trendon the money management side of our business yet.

Our client base has been with us for a really longtime. Fortunately, my father has done well by themover the long run and they appreciate that. Theysee that things move in cycles.

I think what we do really resonates with individu-als because they can understand what we do. Wewant to buy something for less than it’s worth. Imean, anyone can understand that. And we lovebuying great consumer franchises, so when theysee in their portfolio an Energizer or a Home Depotor a Madison Square Garden, or whatnot they getwhat we’re doing.

Passive investing certainly seems to be taking awayshare from active strategies like ours, among theyounger generation. But I’m not sure how sustain-able that is. Just thinking in terms of our high networth business, someone who has accumulatedover a million dollars of investable net worth — Idon’t think they want to settle for mediocrity.

That’s probably not how they’ve accumu-lated those assets — JONATHAN: Yet that’s exactly what you’re doing —locking in mediocrity — by choosing index funds.And I think that they understand that. As youknow, as value investors we don’t claim that timingis our forte. But, at some point, the downside ofthis passive investing fad and also the increasinglypopular “safety strategies” or low volatility invest-ing, are going to come home to roost.

How so?JONATHAN: In the report we sent you, we quoteJeffrey Gundlach of Doubleline Investments sayingthat low volatility stock funds are probably themost dangerous thing out there.” Gundlach is avery smart guy and he’s usually pretty good aboutseeing around corners. He talks about how danger-ous these low-volatility strategies are. As he said,“It’s when you think it’s safe and it starts goingdown that you get mass selling.” I completely agreewith him because they’re being sold on the premisethat they’re not going to go down. But if you look atthem, what they’re putting in them are the thingsthat worked for the last five years. I mean, I’msomeone, and my father’s someone, who believes inmean reversion —

Indeed. You may not be old enough toremember portfolio insurance, but I knowyour dad does.MARK: Yes, I also remember the Nifty Fifty and Iremember that we were dinosaurs back in the days ofthe internet bubble. That was a rough period for us, I


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mean, we underperformed for about four years and Iremember people coming to us and saying that we’redinosaurs and that analyzing companies like we dowas passć and was never ever going to come back.

Then in March of 2001, when the unwinding of theinternet stocks began — and for the next three orfour years — our performance was great relative tothe market. Not only did we significantly outper-form for four years, but we wound up having verypositive absolute performance over that span.

So I really believe, as Jon said, that the fads dujour — whether it’s ETFs or low-vol funds — willhave their day and then something will happen thatwill cause them to self-destruct. So people willcome back — perhaps not in droves as they oncedid — but they’ll come back to buying a greatbusiness at a significant discount to what it’sworth. That’s our mission at Boyar AssetManagement, to buy those businesses at a signifi-cant discount and then to hold them for manyyears, letting the magic of compounding work whiledelaying taxation.

That sounds so simple, until you considerall the reasons why the market may below-balling the price of a great business —MARK: That’s what makes what we do a challenge.But that’s basically what we try to do; we try to findbusinesses that are selling well-below their intrin-sic value, or private market value. So we take thebalance sheet and we tear it apart and we recon-struct it and we place our own values on the busi-ness. If the market isn’t currently reflecting thevalue we see in the company, our feeling is thateither over time the market will come to accuratelyassess the value of the company, or — if not —somebody will come in and acquire it.

It’s interesting, about 40% of the businesses we’veeither invested in or written about have ultimatelybeen acquired by a third party. Lightening struckagain just a couple of weeks ago — when TimeWarner (TWX) got the bid from AT&T (T). This isa stock we’ve held — I went back and looked —most of our position, we’d bought back in 2009,when it was selling for around $20 or $21 a share.

Because?MARK: Warner is a stock I’ve been in and out ofnumerous times in my career, But in each instance,I held it for very long periods of time.

I remember, we owned Warner Communicationsbefore they bought Time. Then they bought Time

and for three or four years the stock did absolutelynothing because people looked at it and said, “It’sa silly acquisition.” Then all of the sudden it hadits run. That’s one of the things you have to getused to when you’re a value investor; there will belong periods of time when your stocks go down orthey do nothing, and then they will have a run. Iremember coming into the office in 2001, inJanuary, and hearing the announcement that AOLand Time Warner were going to merge — and see-ing the stock take off on its last leg up.

Did you sell into the euphoria? MARK: Not that we were smart, but it was a sub-stantial presence in the portfolios — the holdingrepresented about 10% of the portfolio — so thatday we sold half of the position. We didn’t sell theentire position, we only sold half of it, unfortunate-ly, because then the stock started going down anddown and down —

But when you saw Time Warner at 20,amid the financial crisis, you knew it wasas badly mispriced in one direction as ithad been in the opposite direction in theAOL deal? MARK: That’s the advantage we gain from years ofdoing the fundamental work on corporate valuations.One of the things that people miss out on when theyare investing in ETFs or index funds — and one ofthe things that we like to look for — are stocks thatwe can hold for long periods of time. And I’m nottalking about a year or five years, but 10 years or 15years, so that compounding can work its magic, ifyou pick great businesses.

By contrast, if I look to buy all the stocks in theS&P 500, the probability is I don’t know a lotabout most of those stocks. Certainly, the indexfunds don’t know anything about them becausethey have to buy these 500 stocks. Some are goodcompanies and some are cheap, but some areexpensive. And because so much money is gravi-tating to these index funds, there are a wholebunch of stocks within the index funds that havebeen pushed to over-valuations, simply by beingbought as part of the index.

I don’t have to worry about that because what I’mdoing is trying to find the cheapest of the cheap.I’m looking for good businesses that Mr. Market,for whatever reason, has abandoned. My feeling isthat, over time, I’ll do well with this approach.

If you have preternatural patience —MARK: Patience is probably one of the most impor-




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tant elements of stock market investing. First, youhave to find the great business at a good price,then you have to have patience, the fortitude andthe ability to withstand gyrations in the stock mar-ket. That element is critically important.

Looking at your quote machine every single day ishazardous to your portfolio’s health — and I dolook at it every day. But fortunately I have the dis-cipline not to act upon what’s going on intraday orreact to what’s going on day-to-day. Because bylooking at that machine every single day — partic-ularly on days when the market goes down dramati-cally — you tempt yourself to sell, perhaps, whenyou shouldn’t be selling. And conversely, when onesees euphoria — you’re tempted to buy when youshouldn’t be buying.

The better thing to do is really to turn off CNBC,don’t look at the Bloomberg machine on a dailybasis and to know full well that if you own a stockin a good business and you own it for a very, verylong period of time, there are going to be yearswhen that stock might decline in value by 50% or60% or perhaps more. But over time, if you’vedone your valuation work properly, it will eventual-ly reach or come close to the intrinsic valuationthat you’ve placed on the business.

How about an example? MARK: I’ll give you two examples of stocks thathave increased by 100% or more over a period ofyears. A friend of ours, Chris Mayer, who is theCIO of Bonner Private Portfolio, wrote a bookcalled, “100 Baggers: Stocks That Return 100-to-1rand How To Find Them” in which he agrees thatif you pay too much attention to stock swings, in alllikelihood you’ll be scared out of even the beststocks. Chris compiled a long list of examples. I’lljust give you one, which is Apple. (AAPL)

JONATHAN: It’s a 100-bagger.

MARK: But its ups and downs are incredible. Fromthe time that Apple went public in 1980 through2012, Apple was at a 225- bagger. So if you hadinvested $10,000, it would have turned into $2.25million over that span. But you would have had tosuffer through two 80% declines and several 40%retreats in stock, during that time, without selling,to do that. If you did, you made 225 times yourmoney without having to pay any taxes. But if yousold into any of those drastic declines, you missedout on a spectacular opportunity. And that’s what’sso interesting about a value investor.

What do you mean?MARK: A good value investor is going to find agreat company, he’s going to hold it for a long peri-od of time, he’s not going to wind up panicking andselling at the worst moment. And there’s a highdegree of probability that if the stock got cheapenough during his holding period he would add tohis position. At some point it’s likely to becomeone of these outsized holdings that really make hima great deal of money — not only on a percentageincrease but on a dollar basis.

In fact, most accounts that have been with our firmthrough an investment cycle find that a good por-tion of their portfolio is represented by unrealizedgains. We effectively postpone paying taxes andallow our clients’ capital to grow at a better ratethan if we turned over the portfolio more rapidly,because their partner, Uncle Sam, doesn’t get hiscut until we sell their holdings. Sometimes ourshort-term performance is penalized by using thisapproach, but over the long haul it has served us,and our clients, well.

JONATHAN: That’s pretty much what we do — or tryto do. What I do with the analysts here is not onlyfind the businesses that get mispriced every so often,but I want to find ones where we can see a catalyst,something that’s going to make the stock go up invalue over a reasonable period of time.

To avoid value traps?MARK BOYAR: Sure, we want to avoid value traps,but I also want to see an upward trajectory for us,so that our return is there. When an analyst comesin with a stock idea, I say, “Tell me a story. Tellme what makes that stock increase in value over areasonable period of time?” Our performance cansometimes be “lumpy” because we don’t try tomimic the indexes in sector weightings in our port-folio. We believe that over the long haul you arebetter off structuring your portfolio on a best ideasbasis, and so it can often look quite different —contrary — to the major indexes. And that suits usjust fine. We believe, over time, a well-researchedportfolio of high quality undervalued businesseswill lead to superior long term appreciation poten-tial — and reduced risk.

If you pick the right stocks —MARK: That’s also key, of course. The two thingsthat drive long-term success as an investor are timeand quality. You have to give your ideas time towork. And you need to buy high-quality assetswhen the market offers them up at a discount. Noamount of time will salvage garbage assets. But if

WELLLINGONWALLST. November 11, 2016 PAGE 6

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you combine the two, time and quality, there’s noneed to worry about the crazy ups and downs of themarkets — or what the Fed is doing — or the stateof the economy.

So what sort of catalysts are you seeking?JONATHAN: One of the best catalysts is find a octo-genarian who owns a significant amount of stock,with no heir apparent. Because over time either heor his heirs are going to wind up selling the busi-ness. No matter how healthy that 80-year-old is theodds are against him, and they are for me, as aninvestor. That, we believe, works well. Of course,there are all sorts of other catalysts than we canhave. But what we always want to know is what isgoing to make that stock go up.

Like what, besides a doddering owner?MARK: I’ll give you a couple examples of stocksthat we like where I think there is a catalyst.Madison Square Garden (MSG) is a stock that, onfirst blush, people say, “I don’t want to invest withthe fellows who run the company.”

The Dolans have a reputation for lookingout for themselves, at the expense ofother shareholders —MARK: Well, that’s the perception. But let’s go backand talk about our experience with the Dolans. Wewere holders of some Cablevision and Cablevisionalways sold at a discount — we called it the Dolandiscount, because people just didn’t like them, did-n’t trust them. But it sold at a big enough discountfor us to be intrigued.

So we did the work on it and came to the conclu-sion that it was a very inexpensive stock, so webought the stock and — I don’t remember how longwe held it — but we did relatively well in it.

Then the Dolans decided that they were going to tryto take Cablevision private. And this is why Ibecame somewhat intrigued by them — becausewhat they said was, “We’ll take it private — but ifthe minority shareholders vote against it, we won’t.”Remember, they have super-voting stock. So theminority of shareholders voted against the transac-tion, and they didn’t take it private. But what theydid shortly thereafter was they levered up the bal-ance sheet and they paid out a $10 a share specialdividend.

That was the first real shareholder-friendly thingthe Dolans did, other than not taking Cablevisionprivate against the wishes of the minority share-holders. Then they started paying down the debtthat they had put on the balance sheet, they started

paying a regular dividend, they started repurchas-ing the stock and then they spun out MadisonSquare Garden and the AMC networks into twoseparate businesses. As a result, Cablevision stockhad a reasonably — not reasonably — had a very,very good run.

Then, last year — or I guess the deal didn’t closeuntil early this year — they sold Cablevision for$36 a share, which is more than we thought wecould ever get for Cablevision. And we still ownAMC and we own Madison Square Garden.

JONATHAN: As well as Madison Square GardenNetworks —

MARK: That’s right. They then took Madison SquareGarden and they broke it up into two businesses, thesports networks and the arena and teams. What wedid is when they spun them out — and the shareswent down — is we bought more shares.

So today Madison Square Gardens sells at roughly$165 a share, it has a market cap of roughly $3.9billion. It has $1.2 billion in cash, so it has anenterprise value of $2.7 billion. So for $2.7 billionI’m able to buy the New York Knicks, the NYRangers, I get long-term leases on the BeaconTheater, Radio City Music Hall and they own theForum in California — they have two entertainmentbusinesses that are starting to show some realgrowth.

In addition, they own the Madison Square Gardenand they own the air rights to Madison SquareGarden which are worth, we think, as much as$400 million.

But is any of that for sale?MARK: You’re asking what’s the catalyst? Well, thecatalyst is pretty much the same as it was atCablevision. They could use the Cablevision play-book and go out and lever the balance sheetbecause it’s a pristine balance sheet — no debt,$1.2 billion in cash — and pay out special divi-dends to shareholders. They could start a stockrepurchase program. They could pay a regular divi-dend. They could try and take MSG private likethey tried taking Cablevision private.

If they could stomach the price.MARK: They would have to pay a significant premi-um — and they do have the wherewithal becausethey got a couple of billion dollars from the sale oftheir Cablevision stock; so they could clearly dowhat they wanted. And the reason that they wouldhave to pay a fair price is, in my guess, that if they



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didn’t, there would be multiple bidders coming outof the woodwork to try to get this trophy property.

So when you take all the assets and you mark themto the market, you come up with a value of roughly$260 — plus or minus a couple of dollars — on astock that sells for $165 a share.

We’re convinced the value is there, that somethingnice will happen over a period of time, and we’ll beable to compound at a very favorable rate. Thatkind of under-appreciated value story runs througheach and every company that we invest in.

What about the other piece, MSGNetworks?JONATHAN: MSGN is also an interesting companyon that score, and it’s a perfect acquisition candi-date, perhaps, for Fox to get a toehold in New Yorksports.

Content is king. Everybody wants content.JONATHAN: Exactly. And it’s interesting to notethat Steven Cohen recently filed a 13D on the com-pany. But I’d rather focus on another really inter-esting play in the industry, which is DiscoveryCommunications (DISCA).

Why?JONATHAN: This is what we like to refer to as afallen angel — it was once a darling of Wall Streetbut is now unwanted and unloved. When it wastrading in the high-$40s, everyone wanted to ownit; now that it’s trading for $24 - $25 a share, andeveryone loves to hate it.

So that makes it irresistible to you?JONATHAN: Yes, especially considering that theTime Warner deal was done around 11 or 12 timesEBITDA and now this is trading at 8 times. Asyou said, content is king, and Discovery ownsalmost all of its content — and they’re agnosticabout how its delivered to consumers. If you havegreat content you somehow will get paid for it, andyet Discovery is now being put into the penaltybox because everyone is wondering how this wholechanging media/technology world will settle out —and how to profit from that uncertainty — whichwas the theme of our summer research issue, asyou know.

Where you argued for embracing uncer-tainty, as I recall.JONATHAN: To us, when times are uncertain, youbuy the best companies — ones that can take share— during times of disruption. And we love the

Discovery business model because it is the largestcable network in the world, with over 2 billion subswhen you combine all their different channels. Whenpeople are asked for the names of the top 20 chan-nels they want included in a skinny bundle, a lot ofDiscovery channels are always listed.

Then, you also have a great capital allocator —John Malone — owning a fair amount of the stock.They bought back about $1.5 billion of stock overthe past year, they have about $500 million leftoutstanding. They took on some debt to do that, butit is scarcely a pressing burden. Their weightedaverage debt maturity is about 18 years.

Gee, where would the stock be withoutthose buybacks?JONATHAN: Well, we think the only reason thestock is in the penalty box is the strong dollar —50% of revenue is generated internationally. Andit’s never made a lot of sense to me that Wall St.wants a company to grow internationally and havea worldwide presence but then punishes it whenthere’s a currency issue.

So we view currency costs as a transitory thing, Wedon’t really have a view on the dollar, and I thinkover the long run, they will be fine. They’ve growntheir audience share from 5% seven years ago to13%. They’re doing all the right things.

What do you think Discovery is worth?JONATHAN: We have it valued at $43 a share or soand I think we’re being pretty conservative there. It’sa logical acquisition candidate. I mean, do theymerge with an AMC Networks (AMCX) — which isanother Dolan company, possibly? Does Disney(DIS) buy them? Who knows? But it doesn’t neces-sarily make sense for Discovery to be a standaloneentity. How it shakes out is anyone’s guess. Anyway,John Malone has shown that at the right price and atthe right time, he’s a seller of assets and we’re okaybeing invested along side him until then.

What’s another under-appreciated stockyou like?JONATHAN: This next one’s stock symbol is EAT— Brinker International. It’s a great consumerfranchise hidden behind a corporate name — andwe’ve actually had lots of success through the yearsfinding undiscovered values hidden behind corpo-rate names.

For instance? JONATHAN: For example, a few years ago weresearched and bought Energizer when everyone




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was valuing it like a low-growth battery company.But, in fact, almost 50% of their revenues camefrom faster-growing consumer products. We knewthe valuation disconnect couldn’t last forever andwe were proven correct, when they split the compa-ny in two. Now the slow-growth battery businesshas its own capital structure — appropriate for acash machine-type business — and the consumerproducts company with Banana Boat, Schickrazors, etc. is probably an acquisition target.

MARK: Let me just mention, for nostalgia’s sake,that looking for companies whose value attributesare masked by a corporate name has long been awonderful, wonderful way to invest. Years ago,when I taught a class at the New School, I wouldstart off by asking, “Has anybody ever heard ofBinney & Smith?” And, of course, no hands wouldever go up.

But they’d all used Crayola crayons?MARK: Crayola Crayons, right. You’ve got it.Likewise, we liked Quaker Oats years ago. Notbecause we liked the cereal, but because it ownedGatorade and we saw that Gatorade alone was worthmore than the entire market value of the company.

So finding these businesses where a great con-sumer franchise is masked behind a bland corpo-rate name has proven to be a wonderful way for usto invest.

If you can keep track of them. They’ve allbeen rolled up and then spun out oracquired so many times over the courseof our careers. MARK: Oh, absolutely. Quaker Oats certainly has.It’s interesting. One of the great benefits of havingthe research service that we started in 1975 is thatwe have research reports on every company wehave looked at, going back to 1975. All the compa-nies that we’ve ever written about. You can goback and find some great perspective. Take Tiffany& Co. In 1975, it had a market cap of $24 million.

That’s all?MARK: Yes. The building that they had, on 5th Avenueat 57th Street was worth more than the value of thewhole company. So our library is a great resource. Anytime we look at a company today, if we invested in itor had written about it many years ago, we take out thereport and we look at the balance sheet. Just to say,“Gee, it’s amazing what can happen to a company in40 years.” Think of it, a $24 million market cap for acompany like Tiffany’s. It’s unbelievable.

It was another world. MARK: If it wasn’t for that world I would havenever gone into this business. I came in in ’69, atthe end of that great bull market. It was all aboutthe Nifty Fifty and then Polaroid became the firststock that ever sold at 100 times earnings. Fiveyears later, it sold for under $20 a share and itbecame a net working capital stock.

It will be interesting when we get a big correctionlike that again. Because, as a value investor, youwant that — Jon says is nobody hates losing moneymore than I do — and he’s right. But market cor-rections are an integral part of the investmentprocess and without them, you never get five or sixbaggers. So 2008 was the second-best buyingopportunity in my life, and the best was 1970.

That only works if you have anything tobuy stocks with —MARK: Interesting you should mention that. One ofthe things that we do that is contrary to a lot ofother investment advisors — and particularly real-ly drives consultants who look at us nuts — is thatwe always have a large amount of cash available.It’s because we are stock pickers. People ask,“Why do you have all this cash?” I say, “Well, I’ma reasonably good stock picker and so while thecash will hurt me, I think I can still get a reason-able return and make more money.”

But more importantly I want the optionality thatcash provides. When the market has a tremendousdislocation, like it had in ’75 or like happened in1987 or like it had in 2007 and 2008 — If I hadn’thad a stash of cash, I couldn’t have bought theColumbia Broadcasting System at the great priceI did. I couldn’t have bought Saks Fifth Avenue forway less than it was worth. I couldn’t have boughtTime Warner. If you’re tapped out during thosedislocations, you can’t take advantage of them.

So you’re willing to let cash weigh on yourperformance in bull markets?MARK: Yes, you might underperform for a whilebut you more than make up for it when you get amarket correction like that and you can buy qualitystocks at the really, really distressed levels.

Buying at the right price is extremely critical. Oneof my jobs these days, with our team here, is to sayno more than yes when they come up with ideas.Sometimes it’s a great idea, it’s just that the priceisn’t right. So it’s not enough to have a great idea,you have to be able to buy it at the right price. Ifyou don’t buy it at the right price, the great idea



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not going to be great for your portfolio.

I never followed up and asked why youlike Brinker —JONATHAN: Okay, back to EAT, which is a greatconsumer franchise masked by a bland corporatename —

They obviously tried to make up for thatwith their in-your-face stock ticker —JONATHAN: Partly, anyway. They own Chili’s. Theyare the franchiser. But that’s not widely known. Iknow that, because when I’m speaking to ourresearch clients and mention “BrinkerInternational,” I’d say at least 30% have no ideawhat I am talking about until I start specificallytalking about its Chili’s franchising operation. Butthe shares are off significantly from their 52-weekhigh, largely because of Chili’s big exposure to theenergy economy. About 17% of Chili’s sales are inTexas, Oklahoma and Louisiana, where the econo-my hasn’t been so hot this year. But as oil stabi-lizes, it should turn better.

The company in 2015 generated $3 billion in rev-enue. What’s interesting is that franchise revenueis only about 3% of Brinker’s overall revenuestream but it generates about 35% percent of thecompany’s operating profit.

That much?JONATHAN: It is a cash flow machine, they return itto shareholders. Since 2010, Brinker has returned$2.3 billion to shareholders — that is about 85%of the company’s market cap. Meanwhile, they’vereduced shares outstanding by 45%. They havealso been doing over the last couple of years a sig-nificant amount of cap-ex, but that capital spend-ing push is ending, so we think that cap-ex is goingto drop from $145 million a year to the low-$100millions, which will have a significant impact onthe bottom line.

They’re also doing other things like promotingsales of higher margin stuff like beer. Right now,it’s only about 14% of sales; we’re thinking it couldgrow to about 20%.

Another growth-driver for Brinker is take-out busi-ness. It’s one of the areas that’s growing the fastestwithin the company and they’ve partnered with atechnology company to help with that. They’veadded kiosks at all the tables for ordering take-out.It’s also going to be a part of the Amex rewardsnetwork. So they’re doing all the right things. Yetthe stock is trading at roughly 5.6 times our fiscal

year 2018 EBITDA estimate — so at a discount toits long-term average of about 8 times — at rough-ly $48 - $49 a share. We think it’s worth $69 or so.

Hmm. If its franchising business is thatprofitable maybe it should focus on it —JONATHAN: Well, they’re pouring the cap-ex into thebusiness and it’s just going to make it a much moreprofitable business down the road. Restaurant fran-chising is one of the great business models in theworld, given its high margins and the recurringnature of the revenue stream. The strong profitabil-ity of EAT’s company-owned restaurants — it has17% operating margins at Chili’s — has enabledBrinker to generate robust levels of free cash flowand return significant amounts of capital to share-holders. That cash flow is the thing that we reallyfind attractive about the business. EAT hasreturned $1.9 billion to shareholders in the form ofshare buy backs and another $384 million in divi-dends — and it has retired those shares at an aver-age of $32.38 a share, or at roughly a 30% dis-count to its current share price.

MARK: Plus, Wall Street loves companies thathave fee income and they’ll put much higher multi-ples on them than on companies that are operatingbusinesses.

JONATHAN: True, look at Wendy’s, what they havedone. They took the playbook pretty much fromBurger King and did it. McDonald’s was the first todo it, but they didn’t do it as aggressively asWendy’s or Burger King. But they’re all doing itnow and if Brinker went strictly to franchising, itwould be accorded at a much higher valuation thanit currently has.

So what’s another company that you findintriguing at its current price?JONATHAN: My father mentioned earlier that thestocks outside of the major indices have beenignored. They don’t have the first buyers, the indexfunds, knocking on their door daily. And one ofthose stocks is QVC Group. It’s not in the majorindexes. It’s actually a tracking stock, which tradesunder the symbols QVCA and QVCB. The compa-ny is a wholly-owned subsidiary of John Malone’sLiberty Interactive Corp. (LVNTA and LVNTB).

Too complicated for me —JONATHAN: Yes, this is one of the Liberty entitiesand it has a very complicated ownership structure.John Malone hates to pay taxes and he creates allthese convoluted — I don’t want to call themschemes — deals and structures to avoid or post-


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pone taxes. He’s an extremely well-respected busi-nessman but his deals are too complicated for mostWall Street analysts, really.

I was going to say something along thoselines when his name came up earlier — JONATHAN: We’re aware. But if you actually look,QVC’s market cap is roughly $8 billion give ortake, and there are just 8 sell side analysts cover-ing them. JCPenney’s market cap is $3.1 billion,and they are followed by 21 sell-side analysts.Nordstrom’s market cap is $6.9 billion, and theyare followed by 27 analysts on the sell side of theStreet. Kohl’s market cap is $7.7 billion — andthey’ve got 23 analysts following them. Macy’s istrading at a market cap of $11 billion and they’refollowed by 22 sell-side analysts. Yet QVC, with an$8 billion market cap has only 8 sell-side analystsfollowing it.

You mean Wall Street doesn’t respect it?JONATHAN: What’s misunderstood about QVC iswho their core customers are. I’m trying to think ofthe best way to put this —

They’re not all little old ladies with noth-ing to do but watch TV? JONATHAN: No, though they do skew female —

They’re clearly not the highly covetedmales between the ages of 25 and 35 —JONATHAN: No, but they are a very attractive,wealthy, demographic. Their best customers typicallypurchase between 15 and 20 items per month. Letme get the exact data: “QVC’s customer baseincludes women between the ages of 35 and 64 withabove-average wealth. The average QVC customerpurchases approximately 25 items per month andspends $1,400.00 per year. QVC’s best customerspurchase an average of 50 items per year and theyhave great customer loyalty, with 90% of the compa-ny’s orders coming from existing customers.”

Now, QVC recently reported a bad quarter, but wethink that was more a matter of them stubbing theirtoe than anything else. This is a company with agreat operating record since the financial crisis,and because of its soft quarter, you can buy thisgreat franchise now at roughly six times our forwardEBITDA projections.

Isn’t Amazon eating their lunch like it isevery other retailers’? JONATHAN: That’s what people tend to think, butQVC is really a different business. When you go toAmazon, you know what you want and you’researching for it. When somebody goes to QVC.com,

or watches QVC on television, they are being solditems — and it’s a completely different business. We think there’s room for both of those businessmodels to do quite well. Besides, there are lots ofways that QVC could increase shareholder value.

How so?JONATHAN: Well, they own 40%, already, of theHome Shopping Network (HSNI) and they couldpotentially merge with it, there could be a tremen-dous amount of synergies there. Right now, QVC istrading around $18 -$19 a share. Putting a 9 timesmultiple on our estimate of EBITDA, we think it’sworth roughly $34 per share, so we see pretty goodupside potential in QVC.

So basically, it knows how to get certainwomen addicted to its shopping experience?JONATHAN: Yes, sure. When you look at retailers,the question is, what’s the reason for them to exist?Well, at QVC proprietary products make up a veryhigh percentage of their sales. It’s definitely anoth-er one of our higher conviction ideas, even thoughit continues to be overlooked and misperceived byinvestors. In fact, we wouldn’t be surprised to see ahard spin off of QVC Group floated in the not toodistant future, as John Malone continues to stream-line Liberty Interactive’s operations.

Do you want to toss out another idea?JONATHAN: Well, one group we like and we expectthat one of these days is going to turn around is thefinancials — Bank of America (BAC) and Bank ofNew York (BNY)and JPMorgan (JPM) — wouldprobably be the most favored, but those are allwell-covered, well-followed names.

MARK: You know, they have been laggards. Theywere great off the bottom when the market took offin ’08 - ’09 but then for the last couple of yearsthey really have done very, very little — if any-thing. But I think they’re much better businessestoday, at least in one respect, than they were whenthey had all sorts of other businesses underneaththeir umbrella.

They’re easier to analyze — you can really dig intothem, you can really see what’s there. The disclo-sure is much better. They’ve raised so much capitalthat each one of them is way, way, way over-capi-talized. The government, in its own infinite wisdom,wanted to make the big banks less meaningful tothe economy. But if you take the three largestbanks today, relative to the size of the banking sys-tem, they are significantly larger than they werebefore all the regulations were put in place.




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Unintended consequences —MARK: Always. But now we have banking busi-nesses that have great balance sheets, they’ve beenoperating in an environment that has been horriblefor them and to them — and what I mean by horri-ble for them is that we have virtually zero interestrates, there are no spreads, so they can’t make anymoney that way. Where they make their money isfrom fees and mergers and acquisitions and borrow-ings and things of that nature which are very prof-itable businesses.

So if we get to an environment where — I don’tknow what normal rates will be, and everybodysays you’ll never see 5% 10-year Treasuries again— but I’ve been doing this long enough to knowthat’s not going to be the case. At some point, we’regoing to have a 5% interest rate. Especially since,historically, if you look at the average yield on the10-year, going back to 1958, it’s higher than 5%.

JONATHAN: 6.17%, I think.

MARK: In fact, if you look at this bull market inbonds in a chart [nearby], it’s incredible. We’vehad 35 years of an almost uninterrupted bull mar-ket in bonds and declining interest rates ever sincethe nominal Treasury peaked at 15.84% inSeptember of 1981 — and it seems like it will goon forever — but declining rates are going to cometo an end, that much I know.

JONATHAN: What I think is really interesting —my father just mentioned the last 30 years of

steadily declining rates— but look at the 30years before that —when rates pretty muchjust went straight up forbasically the samelength of time, with onlya few hiccups. Now, Iwasn’t around then, butforecasters were proba-bly extrapolating recenttrends continuing foreverthen, too.

I was, and you’reright. All eyes wereon rates continuinginto the stratos-phere. No one evendreamt of ZIRP. JONATHAN: Yes. Youwould have been ostra-cized if you ever made

a prediction like that. To me, 10, 15, 20 years is avery long period of time and when people say, “Oh,I’m going to lock in a 10-year Treasury at 1.7%because oh, four people on CNBC or are sayinginterest rates are going to be low for a long time,” Ithink, just remember how long 10 years really is.

Umm, not a good bet.JONATHAN: No, and I’m not by any means predict-ing rates will bounce back up over 15% for a verylong-time (if ever). But forecasters do tend toextrapolate recent trends as if they will continueunabated into infinity. So investors contemplatingpurchasing long-dated bonds should remember thatfrom 1958-1981 Treasury yields increased virtuallyevery year (with a few exceptions) and our bet isduring that time frame no mainstream market fore-caster predicted that one day yields would ever fallto 1.6%. We are in a world full of disruptivechange and making truly long-term predictions onalmost anything (including interest rates) is a fool’serrand. In the early 2000s, who would have pre-dicted that Blackberry and Nokia would no longerproduce their own phones and that Samsung andApple would be the market leaders — well,Samsung until a couple of weeks ago?

MARK: My thinking is that you have now banksthat have pristine balance sheets. They’re as well-capitalized as they’ve ever been. A good many ofthem yield 3% or more, their profitability isincreasing, the dividends are covered multipletimes. The environment has been horrible for thebanks, in terms of government intervention. And I



Stuart [email protected],

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Source: J.P. Morgan Assset Management

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Stuart [email protected],

(914)768-3133

I’ll say this — nobody is going to believe it — butthis over-regulation has really hurt our economy.

They’re not very sympathetic characters. MARK: I know, but if you talk to any banker andyou ask, what does he think is the problem? He’llsay it’s his inability to make loans because he’s got10 times — maybe not 10 times — five times asmany people that have to approve each step, andthe Fed coming in all the time to examine whatthey are doing. So you could get some relief fromregulation. All I’m saying is the regulatory pendu-lum could swing back the other way a little. Wemight get a little less regulation and the banks willearn a lot more money than people perceive theycan right now. Most of them trade right now at bookvalue or below, at only modest multiples of earn-ings. And I could see them becoming market lead-ers now for a couple of years or more.

That would be quite a change —MARK: Yes, even in the beginning of this year, thefinancials were the worst-performing sector of themarket; it was one of the reasons that we’ve under-performed so far in 2016. We’re not sectorinvestors, we tend to buy the cheapest companieswe can possibly find. But when we go back andlook at the portfolio at times we’ll see we’re moreover-weighted in a particular area because that’swhere the cheapest stocks are found. So we’re notoverweighted, but we do have a number of finan-cials in our portfolios — which hasn’t been helpingus — yet.

The big banks just have a habit of surpris-ing investors, and not in a nice way. MARK: That’s true. But I think their below-marketmultiples pretty well discount their proclivities forugly surprises. And ugly surprises should be lessfrequent because of all the regulation, number one,and number two, also because they are so well-cap-italized. And not nearly as leveraged as they wereheading into the crisis in 2008. Besides, you knowas well as I do — we’ve been in the business solong — that the next bad crisis will not mirror2007-2008. It will come from somewhere else.

True. Not where everyone is watching. MARK: Never. So I think the financials are a goodbet. Some of the money managers, some of thebanks. which have done nothing. We just did areport on Franklin Resources (BEN). If you look atthe balance sheet, they have 40% of the marketcap in cash. The family that founded it controls40% of the shares, so could they take it private?Possibly.

Investing in Franklin is really doublingdown on active management —MARK: True, investment management is a cyclicalbusiness and it is our way of playing active versuspassive and value versus growth. It’s kind of interest-ing that even with the markets in decline there arestill pockets of value. And I think that’s a directacknowledgement the flaw in passive investing —that there are a lot of stocks that are outside theseindexes — and they’ve been forgotten. But throughthe years, we think that these are the kinds of compa-nies that should do well. So even if they don’t do wellfor a while, I can sleep well at night knowing that Ihave a great business. I don’t have to worry aboutowning a basket of 500 companies where maybe 40%or 50% of them are — who knows. It is crazy thatsome of these valuations are where they are, butthat’s creates opportunity for us and we just have tobe patient and wait our turn.

JONATHAN: We put a good quote from Franklin inour report on that idea, from one of their letters:“U.S. passive funds take no view of business fun-damentals or valuation. They are a significant andunnecessary investment risk. For example,investors buying a global index fund in 1989 wouldhave had the bulk of their investment — 34% —in Japan at the absolute worst time to buy Japanesestocks. A decade later, they would have had nearly25% of their investments in technology companiesthat were grossly overvalued.”

MARK: With funds flowing into ETFs purchasingshares of stocks regardless of valuation or otherfundamentals, some stocks and sectors that don’thappen to be in their baskets undoubtedly get leftbehind. Companies in the S&P Staples andUtilities sectors earlier in the year were prominentbeneficiaries of flows into supposed “safety prod-ucts” like low-vol and smart beta ETFs, and so aretrading at premiums to their long-term averages.Consumer staples, for instance, have been tradingwell above their 20-year average multiple of 21.2times, and utilities, far above their 20-year averagemultiple of 15.5 times. Investors have been payingmore than 20 times trailing earnings for utilities —think of that.

Meanwhile, the S&P financial sector, has been allbut abandoned, trading at less than 15 times trail-ing earnings — versus its long term average of over17 — and industrials are likewise lagging. Webelieve that while the shares of Franklin Resourceshave been adversely affected by the flow of fundsfrom passive to active managers and the outperfor-


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mance of growth style management in recent years,they’re now attractive as those trends begin to turn.Sure, its investment style has been out of favor —and I’m all too aware that styles can remain out offavor for a number of years — but for the most partthey do eventually come back into vogue.

You’re holding out hope that value strate-gies are coming back —MARK: Well, last summer — in 2015 — we stuckour neck out and said we thought that value’s longperiod of underperformance to growth styles mightbe coming to an end. It’s too soon to declare victo-ry, but the Russell 1000 value has pulled ahead ofthe Russell 1000 growth since then. With theprospect of higher rates going forward — includinga high probability that the Fed will hike rates againbefore yearend, we wouldn’t be at all surprised ifvalue were able to sustain its current momentum.Especially since the value style has an outsizedexposure to financials — they’re about a 28%weighting in the Russell value, and only about 6%of the Russell growth.

What about energy stocks — they’re alsooverweighted in value indexes vs. growth —MARK: That’s the other interesting thing — wedon’t own oil stocks — I’ve almost never owned oil.I shouldn’t say that. Occasionally, I’ll buy them. But we missed the entire decline in the oil stocks— and some upside, more recently. But cyclicalstocks like energy and materials have drasticallyunderperformed since both the prior market peakand the 2009 bottom. Which makes them the moststatistically cheap sectors.

That doesn’t excite your value antennae?MARK: We’ve generally shied away from commodity-driven, cyclical stocks — given our aversion to play-ing the fool’s game which is macroeconomic forecast-ing. We’d rather hunt for less cyclically exposedstocks overly punished by investor uncertainty of onesort or another. There are select companies in theenergy sector that we’ve been positive on from time totime, but we don’t believe it’s necessarily the mostfruitful place tor value investors to go hunting for out-of-favor stocks in at this point. We just don’t seegreat prospects for a significant rise in the price of oilwithin the next few years, given the market’s supplyand demand dynamics and the significant globalmacro uncertainties that dampen our expectations fora quick rebound in oil prices.

So at this juncture, we’d rather focus on uncoveringindividual businesses that are selling below theirintrinsic or private market values, as we’ve said. And

we’re currently finding those, as we’ve suggested,among the media stocks, in the financial sector andamong the consumer discretionary stocks.

There, we left our interview last Friday, and thencame Tuesday’s surprise election results. I checkedback in with Mark and Jon to gather their thoughts.

What do you think Trump’s surprise victo-ry might mean for investors?JONATHAN: The Trump election certainly fits inwith our theme of uncertainty! He is an unknownquantity, even now. With Hillary, you basicallyknew what you were getting and things would have,in all likelihood, remained pretty much constant.Whether that would have been good or bad is aquestion for another day — but quite frankly it is amoot point.

MARK: As bottom up stock pickers, we should intheory tune out the political and economic noiseand just focus on finding undervalued companiesregardless of the macro environment. But I thinkthat is an impossible task — and probably not awise strategy because macro situations certainlyaffect business values. So we’re watching —

JONATHAN: In terms of how a Trump victory willimpact the economy and therefore the stock mar-ket, I just watched a clip of David Rubenstein, theFounder of Carlyle Group, interviewing JamieDimon, of JPMorgan Chase back in September. Thequestion of the possibility of a U.S. recession aris-ing from political uncertainty was raised. Mr.Dimon acknowledged that the U.S. faces seriousproblems but he then said: “America has the besthand ever dealt to any country on this planet.”

He went on to discuss the competitive advantagesthat America has which he does not believeAmericans fully appreciate. It’s well worth viewing,but I won’t keep you in suspense, his main pointswere:

1) We have peaceful wonderful neighbors inCanada and Mexico2) We have the best military barriers ever builtdue to the Atlantic and Pacific oceans3) We have all the food, water and energy thatwe will ever need4) We have the best military on the planet andwe will continue to have that as long as we have thebest economy on the planet5) We have the best universities on the planet6) We have a rule of law that is not duplicatedanywhere




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https://www.youtube.com/watch?v=AFFNWoJ2LOM



7) We have a magnificent work ethic and inno-vation from the core of our bones

We certainly have our problems and there aremany issues that need to be addressed. But I think,due to the reasons cited above along with manyothers, America’s best days still lie ahead.

We have grown and prospered as a country despitea civil war, The Great Depression, two world wars,the political turmoil of the 1960s including theassassination of a sitting president, Vietnam,Watergate and September 11th. I do not think who

will lead us over the next four years will have thelong-term impact that people are expecting. Wecertainly have persevered through worse.

Let’s hope that having plumbed thedepths of discord, we can all rediscoverbetter angels in ourselves and others.


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Research Disclosure

WellingonWallSt. interviewee disclosure. WellingonWallSt. interviewee disclosure. Mark A. Boyar, is the founder of Boyar Value Group and President of Boyar Asset Management, Inc. aRegistered Investment Adviser. Mark has worked as a securities analyst since 1968. He began actively managing money in 1975 and formed Boyar Asset Management in 1983. In October 1987a group headed by Mark A. Boyar acquired control of American Corporate Ltd., a closed end fund listed on the Sydney Stock Exchange, which was trading at a deep discount to its net assetvalue. Five years later he liquidated the fund at a premium to net asset value. In May 1998, Mr. Boyar launched his first mutual fund, The Boyar Value Fund (BOYAX). In addition, Mr. Boyar haspublished a monthly research report since 1975 entitled Asset Analysis Focus (AAF). This publication (which is currently published by Boyar’s Intrinsic Value Research LLC.) identifies and eval-uates companies Mr. Boyar feels are intrinsically undervalued. Mark’s son, Jonathan Boya, is President of Boyar’s Intrinsic Value Research. Boyar Research was established in 1975 to provideindependent research utilizing a business persons approach to stock market investing. Through various publications, it provides in depth reports profiling companies selling below its estimateof their intrinsic or private market value. Boyar Research takes a company’s financial statements, tears them apart and reconstructs them in accordance with economic reality as opposedto generally accepted accounting principles. Boyar Research seeks possible investment opportunities across the market capitalization spectrum and within a diverse range of industries. Alarge number of the companies featured in Boyar publications are not widely followed by Wall Street. After graduating from Cornell University with a B.S. in Applied Economics and BusinessManagement, Jonathan started his investment career at GAMCO Investors. He then joined Boyar where he established Boyar’s Alternative Viewpoint which was a research product specificallydesigned for the $1.4 billion Global Analyst Research Settlement. This award winning research product was purchased by major banks such as Deutsche Bank, Bear Stearns, Credit Suisse,Lehman Brothers, Morgan Stanley and Merrill Lynch. In 2004 Jonathan received a Dean’s Merit Scholarship from Cardozo School of Law. After graduating from law school, he worked as a lit-igator at the nationally recognized medical malpractice defense law firm of Martin Clearwater & Bell, before rejoining Boyar Value Group in 2008. Jonathan’s efforts are focused on helpingto improve the firm’s research efforts and portfolio management process. Jonathan is also in charge of the firm’s institutional sales effort for both the research and money management ser-vices. Equity securities are subject to price fluctuation and possible loss of principal. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. Carefully considera fund’s investment objectives, risks, charges and expenses before investing. Please view the prospectus or summary prospectus for this and other information. Read it.

This interview was initiated by Welling on Wall St. and contains the current opinions of the interviewees but not necessarily those of Boyar Value Group. Such opinions are subject to changewithout notice. This interview and all information and opinions discussed herein is being distributed for informational purposes only and should not be considered as investment advice or asa recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. Inaddition, forecasts, estimates and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as gospel or as infallible.Nor should they, in any way shape or form, be considered an offer or solicitation for the purchase or sale of any financial instrument. The price and value of investments may rise or fall.There are no guarantees in investment or in research, as in life.

No part of this copyrighted interview may be reproduced in any form, without express written permission of Welling on Wall St. and Kathryn M. Welling. © 2016 Welling on Wall St. LLC

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Documents

listeningin Profiting From Uncertainty€¦ · “You Can Be A Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits” in 1999, he was pretty much single-handedly