William Cohan, Best selling author discusses his latest book Power Failure: The Rise and Fall of an American Icon

The Interview Discusses: 

  • The rise and fall of GE.
  • What could have been done to save General Electric.
  • Who is to blame for GE’s demise.
  • His in-depth interviews with both Jack Welch and Jeff Immelt.
  • The fundamental error that Jack Welch made that tarnished his legacy.
  • How GE capital almost filed for bankruptcy during the financial crisis.
  • What Disney can learn from GE’s succession issues.
  • The mistake GE made by selling NBC Universal to Comcast (and one thing about the deal you probably  never knew).
  • His latest media venture called Puck.
  • And much more…

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About William D. Cohen

William D. Cohan, a former senior Wall Street M&A investment banker for 17 years at Lazard Frères & Co., Merrill Lynch and JPMorganChase, is the New York Times bestselling author of three non-fiction narratives about Wall Street: Money and Power. His new book Power Failure: The Rise and Fall of an American Icon, about the rise and fall of GE, once the world’s most powerful, valuable and important company, was published in November 2022 by Penguin Random House. He is a founding partner of Puck, a digital publication owned and operated by journalists, and a writer-at-large for Air Mail. For 13 years, he was a special correspondent at Vanity Fair.

Click Here to Read the Interview Transcript

 Transcript of the Interview With William D. Cohen:

Jonathan Boyar (00:05):

Welcome to the world according to Boyar, where we bring top investors, best selling authors and business leaders to show you the smartest ways to uncover value in the stock market. I’m your host, Jonathan Boyar. As a big fan of his work. I am very excited about today’s special guest award-winning author William Cohen, who has written multiple New York Times best-selling books, including his latest, focusing on general electric power failure, the rise and fall of an American icon. Bill, welcome to the show.

William Cohan (00:39):

Great to be here, Jonathan. Thank you for having me.

Jonathan Boyar (00:41):

Thanks for coming on. As I said, I’m really excited about the show. And before we get to your latest book as well as Puck, the digital media company you co-founded, both of which I really enjoy and highly recommend. I just want to delve a bit into your background. So you started your career in journalism and then received an MBA at Columbia and had a really successful m and a banking career. Worked at some great firms like Lazar for 17 years, but then you did the transition back into journalism. How were you able to do that?

William Cohan (01:16):

Well, I think desperation and fear had a lot to do with it. I was in my young forties when JP Morgan Chase decided that my career as an investment banker was over. I needed something to do. And at that time, around 2004, there were very few opportunities in banking open for me. And so I decided, okay, 17 years is enough time to do something else. And I thought, well, what can I do that I don’t need anybody’s permission to do that. I don’t need a boss to do that. I don’t have to work for anybody else ever again to do. And I landed on the idea of, you know, essentially going back to journalism by proposing to write a book about Lazard where I had worked, albeit 10 years earlier with no thought of ever, of course going back to writing or writing a book about Lazard. So it just occurred to me that it was just this fascinating and amazing place that was private that nobody hadn’t written about in decades. And having worked there, I sort of knew it from the inside out and knew most of the people who worked there and was hoping that they would give me interviews. Anyway, so I proposed this book, I wrote a hundred page proposal and got an agent and incredibly publishers went for it. So the rest is kinda history.

Jonathan Boyar (02:49):

Not only did publishers go for it, I mean I think you won the Financial Times Book of the year. I mean that’s a, an amazing fee for your first book.

William Cohan (03:00):

That was incredibly satisfying. It was an incredible day. My wife and I flew to London. There was a ceremony at the beautiful public library and London and you know, I was one of five finalists along with Tole for Black Swan and Alan Greenspan for his book about his memoir about being fed chairman. And we did not know who had won. They decided it right before they announced it and when it was me, I couldn’t quite believe it. You know, at the Oscars they put the people who are likely to win in the front row. So there’s not a long walk between getting from the front row to the stage so they can collect their award. The ones who were unlikely to win, they put way in the back. So I was way in the back and took me like 15 minutes to get up to the front to get the award from none other than Lloyd Blankfine, the c e o of Goldman Sachs at the time, who gave me the award. It was great.

Jonathan Boyar (04:06):

That must have been just especially satisfying after your kind of your career setback to really prosper on your first go around.

William Cohan (04:16):

And then it led to my ability to get back into journalism again. I mean, I got a call from Graydon Carter after that. Did I want to write Vanity Fair? Did I want to be your columnist at New York Times? You know, well all these wonderful things started happening and that’s how I resurrected myself, as you say, after a severe career setback that I wasn’t anticipating and had done nothing to deserve. And I had two young sons. And so it went from sort of being all encompassing as a banker to being around all the time at home and trying to figure out what I was going to do next. I don’t recommend this path for anybody, but must say that if my former colleagues at JP Morgan Chase hadn’t terminated me with extreme prejudice, then I probably wouldn’t be a writer today. So I’ve often thought of dedicating one of my books to them to thank them for what they did for me.

Jonathan Boyar (05:18):

You should you know, writing these books seemed like a much better life and more rewarding than being an M&A banker. Not that there’s anything wrong with being an m and a banker.

William Cohan (05:27):

Look, I couldn’t do what I do now had I not done that for 17 years, you know, it was not something that I was passing through. It was a long time. You know, Michael Lewis, who I is a friend and have incredible respect for and don’t understand how he does what he does, he worked at Solomon I think for two years. 17 years is quite a different kind of commitment. You know, I have come away with a deep understanding of the industry, not only from having doing it as a banker, but now writing books about it or now more than as a banker. And you know, as you say, being able to do my own thing, having no boss. I don’t have to worry about colleagues scheming behind my back to get rid of me. I have my own equity, which I share with my publisher and we have a great partnership and I can do pretty much what I want on a daily basis. And you know, frankly, I don’t think there’s any better way to run your life.

Jonathan Boyar (06:28):

You wrote about the Duke Lacrosse scandal as well as, you know, other books detailing the Global Financial Crisis House of Cards, which I highly recommend. But the reason you’re here today is about your latest book on GE, which some have described and I think quite accurately in my opinion as a corporate autopsy. How did this book come about?

William Cohan (06:51):

What I do on a subliminal basis, I don’t set out to do this, but whatever reason, it does seem to work out this way that every book I’ve written, I have some sort of intersection with, you know, professionally or personally. You know, I’m not starting from scratch. You know, a lot of writers choose topics that they know nothing about and wanna find something about and do it because they’re intellectually curious. And I totally get that and I do do that. But I also find that there’s, you know, an intersection with my life, which I think gives me a little bit of a leg up like the book about Lazard, while I obviously worked there for more than six years. And so knew about the firm, you know, intimately competed against Goldman Sachs, competed against Bear Stearns, went to Duke, my book about my friends from Andover, I went to Andover ge, the same thing when I was at Columbia Journalism School, 19 82, 83 out of the blue I got asked to go on a trip for a day on GEs corporate jet to go see their lighting manufacturing plant in Cleveland and then onto Louisville to their major appliance plant.


And you know, it was an incredible experience to see these facilities and to be, you know, flown around on a private jet. Mine was my first time on a private jet ever. I didn’t even really know that there were private jets. So that was sort of in my mind. And then my first job at a Columbia Business School was GE Capital Financing Leverage Buyouts. So I mean, I’d been a journalist covering public schools in Wake County, North Carolina, which was fascinating. And then went to business school and then as one did you know, in the late eighties when all you had to do was breathe to get a job on Wall Street, I got this job financing leverage, which is of course absurd. So I did that for a year and then worked for the Chief credit officer at GE Capital in Stanford for a year and then, you know, moved on to Lazard, et cetera.


And so again, I knew about GE from having worked there, not well or anything, you know, again, I never thought I’d ever write about it. And then fast forward 30 years, one of the people that I had started with at GE Capital at my office mate, was John Flannery, who turned out, stayed at GE and rose up through the ranks incredibly, and was Jeff Al’s successor. So he and I remained friends to this day and for 30 plus years. And when he was C E O, which I thought was an incredible feather in the cap for ge, he’s an incredible guy and deserved that reward or what we thought of as a reward for his incredible performance at ge. And it turned out to be an albatross. So during the course of that, he was only there for 15 months as the ceo you know, he would occasionally share with me how difficult things were and what he was surprised about.


And at one point he said, well you should write a book about this. And I said, but John, I can’t write a book about this. You’re the ceo, you’re my friend so I can’t do that. So interesting suggestion but not going to happen. And then after 15 months, he was unfairly and summarily fired and was essentially what was Theta. And I thought to myself, well now I can write a book about this and frankly I need to figure out what happened here. There’s like a dead body on the floor. How did it get there? And when Jack Welch said that he would speak to me, well that kind of sealed the deal.

Jonathan Boyar (10:27):

The part about Welch speaking with you, it’s like all your books is extensively researched over 700 pages. It’s hard to tell when you’re reading on a Kindle how long it actually is, but it’s still a page turner. It really draws you in at the very beginning. You know, you have your initial meeting with Jack Welch, which I thought was fascinating. Can you tell me a little bit about it?

William Cohan (10:52):

Of course, I knew who Jack was and knew him a little bit from the island. And so I called him up and said I wanted to do this. And he agreed incredibly. And then we agreed to have our first meeting at the Anti Golf Club, which was around the corner from both of us. He wanted to have lunch. So we get there, I mean, I’m not a member there he was, and also at the nearby Sanity Golf Club. So we agreed to have lunch. And first thing out of his mouth before I can even sit down is that he feels like he totally screwed up the selection of his successor, which was quite a revelation to me. And needless to say, and I thought, wow, this is incredible. We had lunch at the next table, it turns out was Phil Nicholson who’d been playing golf that day, cuz it was a Wednesday before the Thursday tournament began in Massachusetts, the Deutsche Bank tournament.


And he was there with Bob Diamond, who was the former c e O of Barclays, who I knew too, who grew up on Nantucket and Paul Salem, who was one of the founders of Providence Equity Partners who grew up in the same town as I did in Massachusetts. And so I thought I was like Old home week here, this is incredible. And Phil Nicholson and Bob Diamond and Paul all came over and paid homage to Jack and like everybody would just continuously pay homage to Jack, which I totally get. And it was the beginning of a incredible time where Jack met with me six or seven times between the Tuck in and Manhattan, New York at his home in North Palm Beach. And basically completely laid out for me, you know, his personal story, his history, his career, his growing up and what it was like running GE. And then his disappointment with choosing his successor, which of course he chose, he could have chosen anyone else. He chose Jeff Alt and I think was quite disappointed with the way that worked out and was quite eager to share that with me on many, many occasions.

Jonathan Boyar (13:07):

As I said, the book was extensively researched. I, I learned a ton, not just about Jack Welter, I’d like to talk about more in a little bit, but it’s also some facts or myths about GE that I guess I just assumed were correct and they weren’t first thing, Thomas Edison was not as involved with GE as the company would like you to think. Is that correct?

William Cohan (13:32):

That’s absolutely correct. In fact, everybody seems to think that Thomas Edison was one of the founders of GE. The one day that the company under its current leadership, Larry Culp agreed to cooperate with me on this book One day only. They let me go to both Crotonville on the Hudson, which was their management training center, which was phenomenal and that they’re now selling or trying to sell. And they also let me go to their research center in NI outside of Albany, which was also phenomenal. And you go in there and the first thing you’re just assaulted by is, you know, all of the Thomas Edison paraphernalia, his desk, the stock ticker, his awards, his accomplishments, his quotations. So I just assumed like everybody else that it was his doing that created this company and his company that became GE. And actually it turned out that’s not right, which I found fascinating for obvious reasons.


The real story is that yes, Thomas Edison was obviously the person who helped to create the light bulb and to help create generation of electricity. So that’s all true. And he created something called Edison General Electric, which was one of the two companies that was merged together along with something called the Thompson Houston Company to form GE in 1892. But by that time, Edison General Electric was not doing particularly well. Thomas Edison was no longer the c e o of the company, his main venture capital backer. A guy named JP Morgan was not that happy with Edison and the CEO of Edison General Electric was in guy named Henry Ard, who was another venture capitalist slash railroad Barron. He was for some reason the c e o of the company at that time. And basically ARD and JV Morgan decided that they wanted to merge Edison General Electric with Thompson Houston, which was backed by a guy named Charles Coffin and his venture capital supporters in Boston.


And Edison was completely against it and tried to thwart it at every turn and ultimately could not, as I like to say, the money man won out. And Coffin was the new CEO Edison wanted nothing to do with it and quickly sold his shares in the company and fluked off to New Jersey to do some sort of like limestone mining project, which ultimately failed to. So is he in the DNA of the company? Sure, yes, he’s in the DNA of the company, but was he a champion of the company’s creation? Absolutely not. He tried to thwart it at every turn and was overruled by the moneymen, which again, very typical as we know. Now,

Jonathan Boyar (16:36):

Another thing that I learned that I found fascinating is, you know, one of Welch’s most lauded deals was buying company. People growing up today probably never heard of but R C A, which housed N B C. However, he was really just buying back what GE had owned years before. You know, that’s a fascinating story as well.

William Cohan (16:58):

Again, one that I had no idea about either. You know, Lazard was involved, Felix Rohatyn was involved in the acquisition of RCA by GE six point whatever, 4 billion deal in 1986. I think that was the largest m and a deal in history at that point. It was on the front page in the New York Times, you know, biggest deal ever. And obviously very exciting, GE getting into the media business by owning NBC. You know, what’s jack up to? It was sort of the embodiment of Jack’s thesis that GE needed to be either number one or number two in any industry that it was involved with. And if it wasn’t, you know, you had to get out of it or if you wanted to be, you had to buy it. So I mean this encapsulated it all. And of course RCA was another mini conglomerate with other things in it besides NBC.


And it turned out I had not realized, and very few other people had realized either that GE had actually started what became RCA inside GE after World War I. Because GE had developed the very exciting radio technology, the radio broadcast technology that was used during World War I by the allies to communicate to each other over secret communications cables or lines or whatever. And a scientist at GE who had developed that technology. So after the war, Woodrow Wilson, the president and Franklin Donor Roosevelt, who was the secretary of the Navy or something like that, didn’t want GE commercializing this technology and selling it. One of the biggest customers for this technology was Marconi, which was a UK company that was a competitor of GE in this radio space, which was again the hottest thing going in 1892. The hottest thing going was GEs electricity distribution and generation business in 1917, 1918.


The hottest thing going was GEs radio technology. And basically the US government didn’t want GE selling it to the British who were our allies during World War I. They wanted the US to control that technology and basically insisted that GE not sell the technology to Marconi and in fact encourage them to create a separate business inside GE called RCA Radio Corporation of America to own that business. And basically the government encourage GE by giving them patents and other business so that they would compensate GE for not being able to sell this technology to the British. Marconi had an American subsidiary, publicly traded American subsidiary called American Marconi, and GE bought that in like a 25 million acquisition. And RCA was off to the races then in the 1930s, again, for reasons that I’ve never really quite understood other than it was too good at what it did.


It forced GE to spin off RCA into its own public company and that’s when David Sarnoff became the C e O of rca. So from the 1930s to, you know, for the next 50 years, RCA was its own independent company, became a mini conglomerate that owned everything from like banquet chicken to carpet manufacturer to big television manufacturer to of course N B C, both on the television and the radio side. It was in all these crazy things, many of which my firm Lazard had helped them put together. Then Jack decided he wanted to buy it and essentially buy it back.

Jonathan Boyar (21:05):

It’s fascinating. I want to get back to that at some point because alt later sold it to Comcast for a song. But just take a quick step back. The book is called The Rise and Fall of an American Icon. And in my opinion, the title is a dramatic understatement as GE just did not rise to become the most powerful company in the world, depending on someone’s age, they wouldn’t realize how important GE was to American business. In some ways they were the Apple or the Microsoft of their day. Now they’re being the process of being broken up into a few separate companies that’s already started to occur whose total market cap is a fraction of the market cap. GE was when Jack Welch retired in 2001. Besides the obvious that nothing lasts forever, what can successful companies learn from your book to prevent what happened to GE from happening to them?

William Cohan (22:04):

If I had the real answer to that, Jonathan, I would probably be the highest paid consultant in the world. And the most sought after each situation, of course, is sui generous. I think ultimately GEs downfall occurred not because it owned GE Capital, one of the largest unregulated financial services companies in the world, which obviously suffered dramatically during the 2008 financial crisis, which again, talk about discovering something that nobody knew. Very few people realized the trouble that GE was in as a result of the 2008 financial crisis. Everybody knew what trouble the banks were in, you know, wall Street banks and the car companies and AIG. But you know, GE was as desperate as any of them and they kind of did it on the down low and got rescued very quietly. Not part of the tarp, not part of a specific rescue.

Jonathan Boyar (23:09):

They were close to filing bankruptcy, correct?

William Cohan (23:13):

GE Capital had hired Solomon and Cromwell twice to prepare the bankruptcy papers for GE Capital, which I had no idea about. And I worked at GE Capital and presumably was paying attention to these things, written two books about the 2008 financial crisis, you know, the collapse of Bear Stearns for one, and how Goldman Sachs made it through without suffering the same fate as Bear Stearns. And I didn’t know about it. So how do you avoid what happened? I think a lot of people would say, well, that Jack just planted the seeds of the destruction that occurred on Jeff ALT’s watch. I personally don’t subscribe to that theory. I think obviously Jack didn’t subscribe to that theory. And I agree with Jack. I think had Jeff listened to the warnings that he was being given regularly about the risks that were inherent in the way GE Capital was financing itself, financing itself in the short term commercial paper market, and then lending long term.


So the big mistake that people make in banking and always gets banks into trouble is borrowing short and lending long. Now that’s of course what fractional banking is all about. That’s what the banking system is all about. You couldn’t have banks if they couldn’t borrow short and lend long because that’s how they make their money. But you have to be constantly aware of the risks that are inherent in that model. Now look, even if you theoretically do understand how banking works and you do have a finance background, you would’ve thought Dick Fuld understood how banks worked and had a finance background, but obviously Lehman Brothers went down the tubes and you would’ve thought Jimmy Cain understood at Bear Stearns the risks in banking. So I’m not saying Jeff Immelt was unique in this, but he had been warn several times by Bill Gross, of course, the one time Bond king.


He had been warned repeatedly by James Grant, my hero at Grant’s interest rate observer repeatedly and even by his own treasurer about the risks that were building up in GE Capital. But Jeff, you know, is not a finance guy despite having gone to Harvard Business School, he was more of a marketing guy. He was an incredible salesman. He could probably sell ice to the Eskimos to use the pathetic cliche, but you know, he failed to really appreciate the risks that were building up at GE Capital. And then when people told him, another story that I found incredible was Michael Pralle, who was running GE Capital’s real estate business, which was incredibly successful. Basically begged Jeff to begin to sell GEs real estate business in 2007. And Jeff ignored it, ultimately fired him, was waving a McKinsey study in front of everybody’s nose saying that the real estate trees were going to grow to the sky.


And then of course a year later, <laugh>, the real estate market was a disaster. And Michael Pralle was right and Jeff should have listened to him. Jeff should have listened to a lot of people that he did not listen to about the risks that were in GE Capital. So my view is you’ve got to choose a ceo. It’s so basic, who really understands the business lines that the company is in. If half of your business is coming from a gargantuan, unregulated financial services business, you’d better have a pretty good idea of how financial services work. So I don’t think Jeff did, and I think Jeff got into deal heat and he either would pay too much for companies he wanted to buy, or as you were referring to NBC Universal, you know, he sort of got snookered by Comcast when he got desperate to sell something, anything. As he burned the furniture beginning in March of 2009 when he sold that to Comcast for two pieces, what ended up being around 30 billion? Well, you know, pretty much in no time n NBC Universal was worth a hundred billion obviously before the pandemic. Now it’s had some tough times, not worth that much at the moment, but certainly worth more than the 30 billion that Comcast paid for it and Jeff sold it without an auction. How do you sell something that valuable and important without an option? I don’t get it.

Jonathan Boyar (27:48):

So basically you’re pointing a little bit to se succession pointing to leadership as obviously things that are very important to companies. So for a real world example, you know Disney right now is in a business that’s undergoing major change, you know, streaming, et cetera, and Iger claims he’s not going to be there for more than a couple years. What could Disney learn from GE to help find the right successor to grow through these transitional problems?

William Cohan (28:21):

She’s somebody who is highly skilled and highly competent, who understands the business lines that you are in, right? There was reporting over the weekend from my friend Charlie Gasparino  about Adam Silver, the NBA commissioner being on the shortlist to run Disney. Now, I don’t know Adam, we’re both Duke graduates. He’s got one of the greatest jobs in the world, he’s very tall.

Jonathan Boyar (28:53):

Why would he give up that job?

William Cohan (28:54):

Why would he give up that job to be CEO of Disney? A job for which he is extraordinarily unqualified. Extraordinarily unqualified. So if the Disney Board chooses Adam Silver and then Adam Silver makes the mistake of accepting the job, that is a disaster. That’s like not learning anything from the GE experience. That’s just incredibly huge mistake. I understand the headline attractiveness of potentially having Adam Silver be your c e o because that’ll bring a lot of attention to Disney and some NBA like excitement. Okay? But he doesn’t understand anything about the business. He’s never worked in the business. Negotiating television contracts with ESPN and a B C is not the same as running the movie business, running the entertainment business, running the cruise bus, all the businesses that Disney’s, again, it’d be a disaster. So I don’t know how his name gets I on a list like that, but obviously please Disney Board do not make that mistake.


And the problem is, you know, again, and Jeff Immelt did it and unfortunately Jamie Dimon does it, these guys hang around the hoop too long. They have a bad habit of sort of wanting to get rid of any executive who potentially threatens them either, you know, potentially as a successor or just either power play kind of way. And so, you know, the cupboard is kind of bare cupboard is kind of bare at JP Morgan for a successor. The cupboard is kind of bare at GE. Now, again, I’m so glad they chose John Flannery, but to not give him the chance and the runway to do what needed to be done was unconscionable the cover of his bear at Disney. Obviously, you know, Iger chose Chapeck and then he gets rid of him after two years. I mean it’s kind of unconscionable. So it’s really important to develop talent, to nurture talent, to not become an Imperial c e o and think that you are the only one who can do the job to recognize that IER was there for 15 years.


Of course Jock was there for 20 years. Immelt thought he was going to be there for 20 years. He only made it to 17. That’s just too long. Sorry, you’re not there to be the Imperial c e o. You’re there as a steward for a great corporation. That was once in G’s case, the combination of Apple and Microsoft and Google rolled up in one. It was this huge technological leader, it was a financial leader. It was the most respected company of all time at one time. It was the most valuable company of all time at one time. And you know, you are a steward of that, that’s a privilege and you’re not allowed to wreck that. And yet it gets wrecked. Joseph Schumpeter, the Austrian economist, talked about creative destruction and unfortunately it’s truly there even though you can’t see it. You know, obviously Apple has had its ups and downs, but since Steve Jobs came back the second time and Tim Cook who doesn’t nearly get the credit he deserves, he took over a company that was worth 300 billion and now it’s worth two and a half trillion. I would say that that is an incredible value creation job that he has done. But no one can imagine Apple going away at this point, but I suspect it will. Nobody would’ve expected GE to disappear, but it’s disappearing.

Jonathan Boyar (32:34):

Do you think he gets too much credit? I mean listen, you can’t argue with the numbers 12 billion when he started 12 over 650 billion. But if you put the time period, he went over the greatest bull run in US stock market history. I mean he was at 20% a year. I think GE Stock compounded the s and p I think roughly 14%. You know, I don’t know if you’ve read The Outsiders great book, he talks about eight CEOs.

William Cohan (33:06):

Yeah, I have read that book. I know him.

Jonathan Boyar (33:08):

Yeah, <laugh>, who kind of says Welch. And you know, he devotes his introduction, not really criticizing Welch just saying how much credit these other people should get. I mean, do you think part of this was just a media play?

William Cohan (33:22):

Jack had the media beating out the palm of his hand, obviously owned  NBC started CNBC and MSNBC and would go on CNBC all the time. So he owned and started one of the most important financial news networks. So he had the media eating out of his hand cause he was so charismatic. And he also had the Wall Street research analysts eating out of the bottom of his hand largely because as you said, I mean every quarter he met or exceeded expectations, 80 straight quarters. And I would say that pretty much every Wall Street research analyst who covered the company covered it because they were manufacturing or industrial research analysts, not financial services research analyst. So they didn’t understand the risks that were brewing at GE Capital only Jim Grant did is more of a financial journalist than a research analyst, although it could go either way on.


That doesn’t work for an investor bank publishes a newsletter. So the combination of having the Wall Street research analyst eating out of the palm, his sand and the media eating out of the palm of his sand and then just outperforming every quarter. I mean that’s very potent, obviously. I mean you might have been like the meme stagger of its day, but certainly it’s valuation got out of hand. You know, people say to me all the time, oh my God, geez, valuation, can you believe it? It was 45 PE or 60 PE for an industrial business, you know, in a financial services business. That was like ridiculous alchemy. And yet, you know, look at all the people who value Tesla at ridiculous multiples. What is Tesla for some reason in Tesla, which is a car company has in various times have been worth more than all the top 10 car companies combined.


Now I, I don’t know if it’s still worth as much as the top 10 combined, but something like that, it’s absurd. That’s a company that’s changing the world and we should not question its valuation, but GE, which also was changing the world and was actually generating the profits now obviously in retrospect was overvalued. But you know, I think Jack was the beneficiary of a very long bull market. But you know, it’s always something Jonathan, it’s always something. I mean I listened to David Solomon the other day at the Goldman Investor Conference. You know, we’ve just been through the roughest three year period, the most volatile three year period. You know, who could have predicted? It’s always something. It’s always something. And so sometimes you have the good fortune of living through, you know, a long bull market. But it wasn’t a straight line. It was 1987, which was significantly down year and what’s been the greatest performing sector and one of the greatest performing sectors since the 2008 financial crisis financial services. Because a lot of the competition went away. And so actually it was a mistake in my mind, but obviously I wasn’t the c o for Jeff Alt to get out of GE Capital to sell GE capital because he didn’t like being a sifi. Well the financial services industry, if he stayed in it would’ve saved GE instead of getting out of it and using the proceeds to buy back stock when it was overpriced.

Jonathan Boyar (36:42):

I fully agree with that. And not to defend alt because he really destroyed value, but if you come in at 47 times earnings as the CEO and you know, GE stock fell about 30% in value over his tenure. A lot of that is just multiple compression. So I guess using just the stock price probably wouldn’t have been a fair judge of how he did.

William Cohan (37:09):

I asked Jeff, he came into the job a day before nine 11. His first day in the job was September 10th, 2001. Obviously the world changed dramatically on nine 11. I experienced it myself. Many of us did, especially on Wall Street. And it was a tough time for ge. They made the engines on the jets, they had reinsured some of the buildings on the Work financial center. They lost some employees. They owned NBC, which went without advertising for a period of time. Jeff, why didn’t you reset? Why didn’t you say to the investment community, to the Wall Street research analysts as people suggested that he do by the way reset and say, look, okay, I can write the script. I’ve just succeeded the greatest c e o of all time. This is an incredible company. But you know, as we’re going to see now post nine 11 people were too enthusiastic about the valuation of the company.


I wanna reset you all to what is the new reality here? It’s going to be tougher. The insurance business is tough. The jet engine business is going to be tough. The power business is going to be tough. The financial services business is going to be tough. NBC is going to be tough. Let’s just reset everybody’s expectations around what this company can do. It’s still a great company. We had an unbelievable leader and let’s just reset. So the stock would’ve gone from 40 to maybe 30 or 25. That would’ve been the best thing that would’ve happened to Jeff. But he wouldn’t do it. He didn’t wanna do it. And I kind of understand that too. That’s a very hard thing for a CEO e o to do, especially a new c e o.

Jonathan Boyar (38:48):

And Jack would’ve killed him.

William Cohan (38:49):

Jack might’ve killed him. He threatened to kill him after March of 2008, after Bear Stearns went down the tubes, when he missed the first quarter of 2008, Jack went on CN b c and said, I, I’m going to take out a gun and shoot you on national television if you missed earnings projections again. So you’re right, he might have, but you know, Jack wasn’t the CEO anymore for Jeff’s own wellbeing and the well being of the company and the expectations that he was setting for the company, he really should have done that. Now again, it’s easy to do that in retrospect, that’s the easiest thing in the world, but he should have done it.

Jonathan Boyar (39:28):

Really cognizant of your time and you know, I love the book. I just briefly want to talk about one of your other ventures puck, which I’m a big fan of. It’s an online, I guess, media company, you know, financial news and et cetera. Can you just explain a little about it, why you formed it and tell us that story?

William Cohan (39:50):

Ever since I was a newspaper reporter in Raleigh, North Carolina, as I mentioned, I never understood why publishers viewed journalists as cost centers, as a cost of the business as opposed to content creators and should be rewarded as content creators. The reason he’s able to sell ads and subscriptions is because of what we were writing, but we were treated as a cost to bear. The newspaper would have 60% EBITDA margins and part of that was because he was paying people like me, 13,000 a year. I mean it was absurd. So I always found that quite objectionable, but not that I could do anything about it. And not that it’s changed any, but along comes puck, the idea of Puck. And one of the main ideas behind it is that the journalists or the content creators, everything that I had talked about and thought about in 1982 and 1983 when I was in Raleigh.


So here we are nearly 40 years later and this is coming around and I was at Vanity Fair and it was started by John Kelly, my former colleague from Vanity Fair. And the idea being that I’m going to get the best journalists and writers that I can and I’m going to give them equity in this venture as well as pay them because I recognize that without them we have nothing and we have to build this business around them. And that was sort of everything that I had thought of. And that didn’t happen at Vanity Fair. That doesn’t happen at the New York Times. That doesn’t happen the Washington Post. That doesn’t happen at the New Yorker. The writers, the journalists deserve equity. We deserve to benefit from the value that we are helping to create. So that was very appealing to me and that’s why I decided to leave Vanity Fair after 13 years. Also because I didn’t really recognize the new Vanity Fair anymore after Gradon left.

Jonathan Boyar (41:50):

As part of, you know, at Puck you write a lot about the media business. I mean it’s an area that you obviously know quite well and you write about Zla and Warner Brothers Discovery and you have an interesting theory, which I do share on what’s going to happen in the media landscape or what you think would happen. And that’s NBC Universal, which you know, took go full circle back to your book, somehow combines with Warner Brothers discovery and you know, I’d just love to kind of hear your thoughts on that.

William Cohan (42:21):

I get a lot of heat for this idea or pushback. Look, I think that you have to somehow be able to see Ryan Corners and that’s Z’s job, that’s Brian Roberts job each on its own aspires to be the top competitor in the industry or the best in the industry, right? Let’s stipulate for all the problems that it’s having, that Disney is at the top of the heap, but there’s also incredibly deep pocketed competitors like Apple with its, you know, apple TV and Amazon with MGM and Prime. And then you know, down at the sort of bottom is, you know, our old friend Paramount Global, which is kind of an afterthought at this point. Even though it has some attractive assets, it’s valuation is sort of disappeared. So in the middle you have Warner Brothers discovery with incredible assets and you have n b NBCUniversal with incredible assets to be at the top tier of the competition.


It’s just inevitable that they’re going to have to combine. Not only are their assets relatively complimentary and I think and be hard at this moment in this regulatory regime, which is being particularly persnickety after years of doing nothing after, you know, hands off. But I think they can’t do anything anyway until the reverse Morris Trust rules are fulfilled, which is two years of being independent. So that would be April of 2024. So sometime in the run up to April, 2024. Cuz you know, these deals take a long time to close. It seems inevitable to me that Warner Brothers Discovery and N NBC Universe are going to have to get together, create some sort of joint venture, a combination where I think Brian Roberts kind of needs to have 51% ownership. So he gets 51% with Z running it as the c E O and then they become an extremely formidable competitor to Apple, Amazon, and Disney.

Jonathan Boyar (44:20):

In some ways, they become Disney in that they have theme parks, a network, and great cable assets.

William Cohan (44:28):

That’s right. They might be better than Disney. They don’t have a cruise ship, I don’t think so. Don’t have to have that headache.

Jonathan Boyar (44:35):

Well, if the NBA commissioner becomes CEO of Disney, they will be better

William Cohan (44:41):

If they make a mistake and choose my fellow dookie, Adam Silver as the NBA commissioner. That will be a big mistake. And the combination of N NBCUniversal and Warner Brothers discovery will be number one. Now, you know, it’s interesting. Both Warner Brothers discovery and Disney have about the same amount of debt at this point. Nick Dad, close to 48, 50 billion. It looks a lot better on Disney than it does on Warner Brothers discovery. And now as you mentioned, Zaz and his team recut their compensation deal so that they’re rewarded for paying down debt. They have done a good job of paying down the debt at the expense of obviously CNN. People gripe quite a bit about what’s going on over there and other people gripe about what’s going on in other parts of the business. But his main job now is to pay down this debt.


They have to get to investment grade. And now the CFO has promised that they will, they’ve got to do that. All bets are off until they do that. The equity is up this year. It was probably oversold last year, but to create more equity value, it’s like a publicly traded LBO at this point. They’ve got to pay down the debt and get the equity value up and then, and that’ll give him the currency to do a deal and all good things will happen at that point. Then he has more leverage with Brian Roberts, who’s obviously going to drive a hard bargain. So I applaud the W B D board for whatever they did to recut the compensation package, whose eyes has plenty of money. So I don’t worry about him, but he’s got to be rewarded for paying down that debt.

Jonathan Boyar (46:14):

One thing with that debt though, and I don’t know if it was Malone, I don’t know if it was a board, I don’t know if it was Zaslav, but they did a fantastic job in that. Most of that debt is fixed rate. Most of that debt is due past 2040. So least he has the benefit of time,

William Cohan (46:29):

Right? But don’t forget when the deal was done, the deal was done when the Fed was making money free. You know, on the other hand, you know at and t, the price of admission was taking, you know, whatever, 50 plus billion of debt, forget whether it’s fixed rate or floating, right? It’s still 50 billion of debt, you still have to pay it back. It’s a shit load of debt on a company that wasn’t generating that much ebitda and who knows what the EBITDA is. Cause they’re now going proforma adjusted EBITDA.

Jonathan Boyar (46:58):

There’s a lot of jargon,

William Cohan (47:00):

Please stop with the proforma adjusted. Just what is the real EBITDA number? Stop. Because that’s what creditors really need to know. That’s what the rating agencies really need to know. That’s how you’re going to establish credibility in the credit markets, and that’s what it’s all about right now.

Jonathan Boyar (47:17):

Well, bill, I really want to thank you for your time. I love talking about your book Power Failure, which I highly recommend people check out. And I’d also recommend people take a look. If you’re interested in media finance, take a look at Puck. You know, it’s a site I personally subscribe to. I get a lot of really valuable information there. And just thanks for appearing on the world according to Boyar.

William Cohan (47:41):

Thank you hiring me, Jonathan. It was great.

Jonathan Boyar (47:44):

I hope you enjoyed the show. To be sure you never miss another world according to Boyar episode, please follow us on Twitter at Boyar value. Until next time.

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Chip Brewer, CEO of Topgolf Callaway Brands discusses how he turned around Callaway’s traditional business and more…

The Interview Discusses: 

  • How he turned around Callaway’s traditional business.
  • How “off course” golf is now larger than “on course” golf.
  • How Topgolf is increasing participation in traditional golf.
  • The economics behind a Topgolf location and why scale matters.
  • Why he does not believe a rising interest rate environment will impact the expansion of TopGolf.
  • How he had the confidence to “bet the company” and purchase Topgolf in 2020 (during the throes of Covid).
  • The significant opportunity they have with Toptracer.
  • His thoughts on the current valuation of Topgolf Callaway Brands.

To request a copy of our report on Topgolf Callaway Brands that appeared in the recently released Boyar’s Forgotten Forty, please click here.

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About Chip Brewer: 

Oliver G. “Chip” Brewer III has served as a Director and the President and Chief Executive Officer of Topgolf Callaway Brands Corp. (“Topgolf Callaway Brands” or the “Company”) since joining the Company in March of 2012. Mr. Brewer oversees all areas of the Company, and under his leadership, Topgolf Callaway Brands has transformed into an unrivaled tech-enabled Modern Golf and active lifestyle company, with a portfolio of global brands including Topgolf, Callaway Golf, TravisMathew, Toptracer, Odyssey, OGIO, Jack Wolfskin, and World Golf Tour (“WGT”).

Mr. Brewer served as Director of Topgolf International, Inc from 2012 until March 2021, when the business merged with Callaway Golf Company, and served on the Board of the National Golf Foundation from 2014 to 2019. He was the President and Chief Executive Officer of Adams Golf from January 2002 to February of 2012.

He is a 1986 graduate of the College of William and Mary, and he received his MBA from Harvard University in 1991.


Click Here to Read the Interview Transcript

 Transcript of the Interview With Chip Brewer:

Jonathan Boyar (00:05):

Welcome to the world according to Boyar, where we bring top investors, best selling authors and business leaders to show you the smartest ways to uncover value in the stock market. I’m your host, Jonathan Boyar. Today’s guest is Chip Brewer, CEO O of Topgolf. Callaway Brands. Chip was president and CEO O of Adams Golf from January, 2002 to February, 2012. Chip then joined what was then called Callaway in March of 2012 as a director, president and c e o where he oversees all areas of the company. And under his leadership, Topgolf, Callaway Brands has transformed into a tech enabled modern golf and active lifestyle company with a portfolio of brands including Topgolf, Calloway, top Tracer, Travis Matthews, Jack Wolfs Skin, and much more. Chip, welcome to the show.

Chip Brewer (00:58):

Thank you Jon. Great to be with you.

Jonathan Boyar (01:00):

I’m really excited to have you on the world. According to Boyar, Boyar research has been following Callaway for quite some time now. I think the first time we profiled the company was in 2009 when I had a market cap of about 489 million. Today the company’s Mark Cap is well over 4 billion and it’s a vastly different business. In large part, these are the changes you have implemented. You know, I look forward to today to hear more about the Topco Callaway story and where you see the business going in the future. So you joined in 2012. At the time, the business, meaning the legacy Callaway had gone through, I believe about five CEOs in the decades since the founder Eli Callaway passed away in the early two thousands. Business really was not in good shape. Then why did you think you could turn around the company when so many other people had had failed?

Chip Brewer (01:53):

Good question, Jon and I was obviously hopeful that I could turn around the company, but was I sure. I don’t know if I was sure or not. I had been around the golf business for some time at that point. I had been at Adams Golf for 14 years. I ran that company for 10 years. But Adams Golf was a niche player or at that time the industry had its top tier players, which are candidly still the top tier players. The Calloway Tailor-made Titleist Ping, if you would, which are scaled OEMs. And then it had a really strong second tier of players, Adams, Cleveland, other brands that have since gone away, Tommy Armour or Lamar. But those second tier don’t really exist anymore. It’s kind of consolidated even further. And it was such a great opportunity for me because I, you know, really loved the game of golf, the golf industry, and this my chance in the majors right to step up and see how I could do at a big brand.


And the opportunity was also one that wasn’t doing well. But it’s an incredible brand with great resources. But the first day I walked in, Jon, I was intimidated too. I didn’t wanna show that. But the headquarters out here is big and when you’re running a company, we had more people in r and d at Callaway than we had in the entire company that I had run prior to being here. So it was a stretch opportunity for me as well. And, but I was foolish enough to believe that maybe I could add a little value and we’ve had a nice run.

Jonathan Boyar (03:43):

That’s an understatement and that’s a nice run. What skills did you really learn at Adams golf that you were able to translate into your success at Callaway?

Chip Brewer (03:54):

Well, by the time I got here, so I knew a lot about the golf industry. I grew up around the game, so I grew up like a lot of other avid golfers. I grew up caddying in the Northeast. I worked in a golf shop, I played high school golf, college golf. So I have a family that is very involved around the game. My dad was a great player, still a good player. So knew golf as a traditional golfer and had a passion for it. But Adams golf makes you scrappy, it makes you learn. I was there 14 years by the time I got here, I kind of knew the industry and I was very hands on the equipment side. So coming here with the strength of the brand and the r d resources, it was a neat opportunity and we were able to kind of bring the company back to some of the basics that Eli used to do and focusing on outstanding golf equipment. That is what we call D S P D. And I’ll unpack that for you in a little bit.

Jonathan Boyar (05:06):

It’s interesting, you mentioned your dad was a fantastic player. You played college golf, the prior permanent c e O of Callaway golf, a guy named George Fellows. I think one of the things you probably don’t remember, but you, you were in our office 2013 2014 and you mentioned that he was a tennis player, not a golfer. Obviously you don’t need to be a golfer to run Callaway Golf, but how much do you think that’s,

Chip Brewer (05:33):

You’d say that Jon, but it’s interesting cuz in theory you don’t need to be an avid golfer to run a golf equipment company, right? It should be doable that you could just bring in a great business person and they can successfully run a golf equipment company. But then when you actually look at the tape and look at the track record, it is a perfect record. It never works. So every successful, in my mind, successful c e o of OEMs that in the modern era, they have all been cut of a similar cloth in that they have a background somewhat similar to what I just talked about, Eli Calloway, even the modern era, while you align at Titleist who clearly did an incredible job, Mark King at TaylorMade, even current Dave Mar Titleist, we all have to have a, seems like even though I get why it doesn’t, in theory you should be able to rely on other people’s expertise for understanding the consumer and understanding the nuances of the product. But in practice it seems to work and it only seems to work when you have somebody that really has firsthand understanding of those things. And it could be, there’s so many nuanced decisions that go into a successful c e o of an equipment company, whether it’s tour sponsorships or product decisions or how the marketing’s positioned, et cetera, where you just bring in a classically trained marketer or classically trained c e o. Candidly, it doesn’t generally work.

Jonathan Boyar (07:27):

That makes a lot of sense except for one part of the equation because you are shifting or you’ve shifted to something called modern golf, which is something I I love to talk about and I would think was someone who is a golf purist or who grew up in the game might not really like that transformation. So you have to also keep somewhat of an open mind too.

Chip Brewer (07:50):

Yeah, that’s right. But first foremost, when I got here in 2012, we needed to restore Callaway to being the number one golf equipment company in the world and turn around our core business. So job one was that and once we were successful at that and then you know, you start looking at what can be next and how do we grow from here. But until you get that job one done, it is all about that job one, we’ve been fortunate in that we’ve had the opportunity to do more than just that job one here. But you know, we don’t wanna underestimate that importance and it’s still that way, right? It’s like we’re gonna talk a lot about all the growth initiatives and how much we transform this business. And we probably won’t talk about the Paradigm Golf Clubs, but the Paradigm Golf Clubs are freaking awesome and they are again, the expression D S P. So they are pleasingly different, demonstrably superior. And making sure that we continue to do all of that is that’s critical. We can’t get lost in our new initiatives and not remain competitive on the golf equipment side. Why we have these fancy new growth areas that we really do have in spades here.

Jonathan Boyar (09:24):

Yeah, I mean the r and d that goes into some of those clubs you just mentioned are, are unbelievable. I think what you spent 60 million a year on r and d or so, is that right?

Chip Brewer (09:36):

We spend a lot of more than that now. So Jon, we spend quite a bit across all the different business units, but even in the core business it’s a significant and important investment and it helps differentiate us.

Jonathan Boyar (09:49):

Yeah, I mean you have people work for Nasaa who are designing clubs.

Chip Brewer (09:53):

It’s crazy and it’s exciting and it’s fun and we literally have rocket scientists and the software engineers now because of the AI significance and a lot of really smart, highly motivated people working on golf equipment. But then at the same time we’re selling nachos and entertaining you as you’re going to halts in Long Island. And it’s kind of cool because golf is so much bigger, broader, higher growth, the energy around the modern game and the sport and our position in it, which is very unique and hopefully leading.

Jonathan Boyar (10:33):

So you, you recently changed the stock symbol from E L Y, which is your founder to M O D G short for Modern golf and you change the name of the company to top golf Callaway Brands. For those of you who don’t know, can you just define what modern golf is?

Chip Brewer (10:52):

Yeah, so modern golf is the combination of off course and on course golf. Golf was only, you know, around at golf courses and green grass ranges forever, right? And it was a very small, very exclusive, unfortunately limited business and sport. And the National Golf Foundation put out some stats on this recently where golf course golf is now larger than Enco golf. And so how the world is going to experience golf, it may be like I did, I grew up around the game in traditional golf and I caddied and I played on a golf course and everything that goes with that. But I think well already more people are gonna experience golf at a top golf than are gonna experience golf on a traditional golf course. And that change is gonna accelerate and it’s exciting as heck and it democratizes the game. It brings in new energy, structured growth, younger demographics, more diverse demographics, it will feed traditional golf. I mean top golf’s the greatest thing that’s happened to golf since Tiger Woods. It’s just transforming the game. And there are other avenues around the game that are helping on this, but top golfs by far and away the biggest factor in there. So modern golf is a new interpretation, which is the only reasonable interpretation of golf that includes both traditional golf and golf course entertainment, golf concepts.

Jonathan Boyar (12:35):

So I mean you mentioned top golf and just briefly what for those of you who don’t know, and I imagine there are a lot less who don’t know about this now obviously it’s growing rapidly. What is top golf?

Chip Brewer (12:48):

Top golf is a golf entertainment venue concept that takes a driving range and crosses it with a nightclub and high energy entertainment complex that is a total engaging, totally inviting, fun, easy place to go, have fun with friends and sometimes practice golf but not really. It’s more social, more entertainment. And it just changes the approach to golf because it’s totally fun. It’s in big pie density locations usually. So it’s not remote locations and different parts of the day it has a whole different vibe in the afternoons or the evenings and the weekends, it’s date night, it’s also birthday parties and corporate events. But really appeals to everybody, golfers and non-golfers. You literally talk to people now and they’ll, you’ll ask ’em, do you play golf? And they’ll go, no, but I top golf, it’s like a verb. And the tam for golf, so like golf equipment oem, when I put that hat on, I’m really looking at about 8 million people that I’m targeting annually. So there’s about 8 million that spend an adequate amount on golf to drive golf equipment revenues. The TAM or who we would look at for targeting for top golf is everybody. And so it just changes the dynamic of the sport as we build these out and make this national and international concept more available because you know, it seems to resonate so highly with people.

Jonathan Boyar (14:40):

Can you just break it down, if you wanted to build a top golf three years from now, I think that’s the lead time or so to, to build.

Chip Brewer (14:47):

Yeah, so it’s, it’s a lead time on a top. Golf can be anything from 10 years. Cause if you’re working with the municipalities and we’re working with the city of El Segundo on on that site, which is the one near lax, a big one that converted a municipal golf course that was losing money and not successful into a top golf along with a 10 hole part three course. That was a 10 year project. We’re working with the port authority here in San Diego. That will be a long tail project. So these things can take some time to work out if it’s totally an easy project, it’s still three years from start to opening day to get a top golf from concept permitting, construction opening. They are fairly capital intensive. They can be anywhere from ballpark 20 million to 55 million to build. We use reap financing to finance 75% of that.


And there’s a fair amount of proprietary knowledge, some proprietary technology and you know, at some point during the podcast we’ll talk about how we got comfortable doing the deal, right? So they’re not easy to do quite frankly. And there’s a operating acumen that goes into it as well as a ability to choose those locations and successfully open and negotiate ’em. But when you do ’em right and we know how to do ’em right, they are very attractive return. So 40 to 50% cash on cash return or a levered return of 40 to 50% in in that third to fifth year.

Jonathan Boyar (16:33):

So you have a, in a lot of these, a partner I guess it’s more of like a REIT that helps you with this. How does that relationship

Chip Brewer (16:40):

Work? Well the REIT does the financing for us, so takes some of that capital costs out and that was especially important in the early days when the company was private and you know, we were an investor and then there was private equity and a couple other key investors. But they’ll finance 75% of it at a a reasonable cap rate and it’ll allow us to do more of these on a somewhat more efficient capital structure. But it’s still requires a fair amount of capital going in. So you’re still putting in ballpark seven and a half million per location more than that for the bigger ones.

Jonathan Boyar (17:22):

I mean with, with a 40 to 50% cash on cash return, you still have a lot of margin for error. But you know, with interest rates rising, does that worry you with future returns and future expansion opportunities?

Chip Brewer (17:36):

Not really Jon, because here to four, so at this point we haven’t had to raise our cap rates to the, so we’ve with top golf, top golf has become more proven, more credit worthy, et cetera. That’s probably offset some of the rate pressure that otherwise would’ve been there. But even if rates continue to move up a, there’s enough margin in these things that we would be able to absorb that. But B in more importantly is that we’ve been able to outperform our stated profitability goals for these things. So we’re getting better at this. We’re not only creating structural growth but we’re also improving the profitability of ’em. So yes, lower cost money would be better <laugh> but of the things that keep me up at night, that’s not it. As long as we continue to move on the past, we’re moving with these venues, we’re in pretty good shape and we’re wildly excited about it.

Jonathan Boyar (18:43):

So internationally you’re going with partner franchise partners. How come in the US because you have a lot of green space, I mean I think you said you have 200 or 250.

Chip Brewer (18:55):

That’s right. We think we can do 250 of ’em in the US

Jonathan Boyar (18:58):

So you can get there a lot faster if you franchise them, sometimes slows better. But if you can find the right franchisee who knows what they’re doing, we Is that something you would consider

Chip Brewer (19:09):

Here to four? So we never say never on many things Jon, right? Unless it’s something to do with ethics and integrity where there’s very few nevers. But at the moment we like in the US and the UK and we haven’t determined what we’re gonna do in Canada yet, but we like owning them and one of the reasons for that is we get to control the culture and the experience so strongly. And so if you look at some of these people that have worked for franchised operations and then move back and forth, you hear that theme a lot. And so your experience, I think it was before we hit record here, when you were talking about going to Holtz and you talked about how good the people are, the people we call ’em Playmakers at top golf, an incredible difference maker and how we recruit, train, being able to run national campaigns across things, advertising programs.


We just signed a national partnership with Honda. There’s a lot of merit to doing that the way we’re doing it in the UK and in the us which we also have a hundred percent good. Great knowledge and expertise when you go into the Middle East China, I’m looking at you, you’re giggling, right? Yeah. Obviously leveraging some other people’s expertise, local connections, knowledge and financial resources in those markets with options to purchase equity in the future. Negotiated in the to the deal, but options not obligations. That’s a really good balance and And we’re very happy with that.

Jonathan Boyar (21:04):

Yeah. And they’re trying to get a land approval in Abu Dhabi or wherever is probably difficult.

Chip Brewer (21:10):

You generally end up partnering with a Yeah, somebody that has that knowledge, connection, expertise and you know we have the Dubai site and our partner is very well connected there and does a great job and we got an amazing site going. So the strategy that they employed and we’ve continued on, that makes a ton of sense and we’re excited about it.

Jonathan Boyar (21:35):

So what’s the competitive advantage? You obviously have the Playmakers as a top golf, it costs a lot of money and you have the technical know-how. Is there anything else?

Chip Brewer (21:46):

A lot of it Jon, and this is one of the things that I, you know, I spent 10 years on the board of Topgolf prior to us merging with him. So when I got to Callaway we had a minority investment in that business already. Topgolf and I spent 10 years as a board member there gambling, watching him grow, watching him learn, watching him make mistakes, gaining a lot of insight and knowledge. It’s a great business if you do it right and it’s a very difficult business if you don’t do it right. And we’ve already had competitors come into the space and build a few venues and say no moss, this is not for us. We’re moving to a a different concept and I watched that at Topgolf, some of the early venues and operations. You get a few wrong, it’s really tough. Even at Topgolf they didn’t make much money through 2019. So you need a bunch of venues, you gotta be really good at operating ’em, you better have a world class real estate development team and building out the venues. This is a business that does really well at scale, not so great until you have that scale. And there are some other barriers to entry, right? Where it’s like once you put one in, putting one next to that one is probably not the easiest or smartest thing ever for somebody to do. So good structural business from that perspective,

Jonathan Boyar (23:23):

What’s the biggest barrier of entry to creating one of those? So we mentioned earlier I went to the Postville location, it’s exit 62 up Long Island Expressway. So people who are not familiar with the area, it’s a decent drive from New York City. Is it because land’s so expensive that you can’t have it in more community locations for metropolitan areas? Or is it, what’s the strategy behind that?

Chip Brewer (23:47):

Yeah, it really is use of land, right? They do well in high traffic, high density areas and Ville is in itself a high density, right? But it is probably too far out to pull a lot of traffic outta Manhattan. But it’s got high density, high net worth, high protractive demographic market in and of itself out in Ville. And you know, the barrier to entry of doing these is the expertise and then if you just do one, it doesn’t really add up to anything. You’ve gotta do multiples of them to scale it up. You can’t have a real estate team. I mean they have a world-class real estate team and operations team that you have to be able to share across. Right now we have 82 owned and operated venues. So we’re last year to a little over 1.5 billion. So when you have that level of scale, you have the resources to support all these things appropriately. You just open one venue and you think you’re gonna have the expertise to identify, develop and run ’em. You might, but good luck. It’s could be a lot of work.

Jonathan Boyar (25:08):

So you said you know you can get about 200 in the US you’re around 80, 82 now, but is there a diminishing return? Is the hundred 80th site you think gonna be as popular and profitable as the ones you’re building now or are you hitting the kind of low hanging fruit in terms of good geographic areas?

Chip Brewer (25:28):

We think that we’re gonna be able to do two 50 in the us will there be some diminishing return maybe, but it’s pretty far out and we’re also improving the economics of the model as we go along. You know, when we did the top golf transaction, we talk about the profitability of the individual venues as EBITDA margin. So EBITDA margins were in the 29% range. We thought well let’s see if we can get, you know, we put a goal out there getting to 32%. Now we’ve exceeded 32% and we’re not putting another number out there yet, but we believe we’ll be north of that going forward. So as you’re improving the economics of the model and I talked about on the last earnings call these new ones like in Boise and Wichita that we opened that are a new more cost effective model for these mid-size markets. We’re pretty confident on the economics of this and the growth path.

Jonathan Boyar (26:28):

So before, you know, we alluded to the top golf deal that you did and in retrospect to use a different sports metaphor, it’s been a grand slam. I mean it’s been a fantastic use of capital. However the deal is announced in October of 2020, which seems like ages ago when it’s really not. That was before we knew the good news on the vaccine front. So you took a big gamble,

Chip Brewer (26:55):

It was a little bit of a bet the company and it certainly bet my career and reputation play so,

Jonathan Boyar (27:03):

So what gave you that confidence? I mean those are the exact words. What I was gonna say was that the company type of deal, like and if you read the outsiders or other business books, you know CEOs do that, you know maybe you’ll be in the next edition <laugh>. Like what gave you that confidence?

Chip Brewer (27:20):

Well being on the board, be honest with you Jon. So I didn’t approach this lightly and I didn’t approach it without a candid, I had insider perspective. So we had talked about, oh at the Callaway board strategically was there a way for us to acquire or merge with top golf? We had talked about it numerous times through the years and we couldn’t ever get that done because top golf was so proud of its valuation that it thought it was going to be much more valuable than Callaway Golf. So even at that stage when it had almost no profits, so it just wasn’t a deal that could get done at that time. Covid hit and they were ready to go public. So they were gonna go public in mid 2020 but Covid comes in March, the world shuts down and they weren’t adequately capitalized at that stage.


So they needed a plan and that dynamic in that environment created an opportunity At the same time I had been on that board for 10 years. There’s two things or three things that I thought I knew that I could bet on. One was the consumer loved top golf for 10 years. We never had a consumer issue. We had plenty issues, <laugh> issues longer than I can bore you with longer than my arm, right? A list of issues. But the consumer loved it, they loved it in different economic climate. Let’s see, was always as stupid as it sounds, the biggest complaint was the weight was too long, right? And so, okay, that’s a good problem. I like that as my starting point. The second thing that I was highly confident on was the real estate team. They identified and opened venues and I guess that second and third so the real estate team could identify these sites and they were world class, still are, they just do a phenomenal job.


It’s a unique skill. I watched it develop from mom and pop approaches, which candidly that’s risky capital when you’re doing it that way to world-class team. And then our ability to open these venues. So cuz it’s such a capital intensive thing, right? You gotta feel good that you’re gonna be a, if you’re deploying that much capital, you’re gotta have a high certainty that it’s gonna have that return that you’re putting on your Excel spreadsheet. And I felt good about those points and that’s what gave me the confidence to propose it to the board and the board. It wasn’t from left field, although the timing was unique. A funny story on that Jon so literally worked on it all summer, I mean it was consuming and was fortunate cuz the golf equipment business was doing great by then after a near death experience. Quite frankly, just like everybody else, when analysts are asking me, well how long can you last with zero revenues?


And I’m like, how the hell do I know how long I can last with zero revenue? So I’m guessing not long, didn’t model that one. So we get through the zero revenue conversation at the same time we’re negotiating to buy top golf, which sounds insane, but that’s the way it works. Get the deal announced and so it’s sometime in late fall and it’s literally the weekend that I wanna, we’re gonna announce it on Monday. One of the variants of Covid starts spiking again and I know the stock is going to get destroyed if I announce this deal into this and I’m like literally calling up advisors and board members, I’m like do we do it? Do we don’t? And we do it, the stock does get destroyed. It goes from like $20 or $21 to 15 the week or two after, right? Because my existing shareholder base gets scared, which I get it. And then it recovers wildly goes way back up. And then since then has had its mandering path but it wasn’t as smooth sailing as it always looks in the background. But it was something we had confidence of and the reason we have confidence is cause I, I had 10 years of experience watching this thing develop.

Jonathan Boyar (31:56):

So part of what you bought bought is somebody called Top Tracer with the top acquisition. For those that don’t know, can you just briefly explain what what that is?

Chip Brewer (32:05):

Yeah, top Tracer is the leading range tracking technology but it’s also on, you’ll see it on TV quite a bit too. So if you watch PJ tour events or the majors, you’ll see these lines draw on the track the golf ball during flight and it’ll tell you the ball speed, the launch angle and where the ball ended up, et cetera. And so the cool part about that is it converts driving arranges and makes ’em a modern tech enabled location. So you would go to a driving range and be able to use Top Tracer to either play different types of entertainment games or a more improved practice experience. So literally I could be going to a driving range and hitting shots and practicing my game and getting better data on that and doing what’s called a combine. And then my niece or nephew could be next to me knocking down a virtual castle.


And when you put it in driving ranges, if it’s a driving range that charges for the buckets of balls or time the revenues go up 25 to 40%. So wildly changes what driving ranges are all about and we use it at all the venues we’ll have it in all the venues by the end of this year is the leader in this space. I’ll tell you I think that driving ranges will move to it almost a hundred percent in the future because it’s such a better experience and you know it’s transforming that it’s a great synergy with Callaway because we get all the data and the ability to have that interaction and with the golf consumer. So if you’re practicing and you know, I’ll know that you were practicing and how you were hitting your six iron and I’ll be able to hopefully help you become a better player and have more fun doing.

Jonathan Boyar (34:10):

And is it a big CapEx for the driving range?

Chip Brewer (34:13):

No, this one’s pretty small. So the venue business is a pretty capital intensive business. Literally the driving range signs a five year agreement with us. All they’d have to do is get power and data to the driving range and we’ll take it from there and then they sign a agreement with us and pay us either per day or something along like that for over a five year period of time.

Jonathan Boyar (34:38):

So there’s no real upfront cost. So it’s a no brainer for them.

Chip Brewer (34:42):

Minimal upfront cost a hundred percent.

Jonathan Boyar (34:45):

And I think you said that you have about 3% of the 610,000 bays out there are have top tracers

Chip Brewer (34:56):

Very early days, particularly in the green grass, particularly in the US as you would expect in Asia it’s going pretty quickly cuz they have a lot of covered driving ranges there. So we’ll convert that market really quickly. And in the US there’s not as many other than top golf, right? A good for a covered bay driving range doesn’t really exist that often. So you really gotta go after what we call green grass driving ranges, which doesn’t mean it’s actual grass but it just a driving range whether you’re hitting off mats or not. That is one layer, one level if you would and not always most modern or engaging concept, but we’re gonna make ’em better.

Jonathan Boyar (35:42):

Is the competitive advantage there, the Callaway sales staff who’s already selling into the range or

Chip Brewer (35:49):

Yeah, our competitive advantage in this space is that our installed base, the quality of the games, the network if you would across it so that you, we can leverage the same reach to consumers and tournaments and programs across, you know, by the end of the year it’ll be I think 30,000 bays that will have installed. So you’ll be playing competitions and be able to play the St. Andrews challenge against your friends and you need a big installed network to make that fun. And then you know, our reach, because of our reach across modern golf, we know all these range owners and green grass locations and we can do some fun things with that.

Jonathan Boyar (36:35):

So something that I guess it premieres in two days, something called Netflix full swing, you know it’s being released in a few days. It seemed like a similar type of docuseries that they had for Formula One. Is this anything that, do you see the same thing happening that happened with Formula One to golf or is that just wishful thinking?

Chip Brewer (36:59):

I don’t know. I think golf probably more. Formula One in the US was pretty nichey prior to the big growth spurt and the Netflix documentary, which obviously had a an amazing impact on that sport and the awareness and participation. So we’re not starting in a similar spot, but there’s a lot of excitement about this Netflix full swing and Jon, there’s just a ton of really cool things going on in and around modern golf right now. I mean from the tours to top golf to other golf entertainment concepts and Five Iron and golfs on and the Netflix documentary, they’re now, it’s this new concept called Tomorrow or T G L, which is a Monday night competition that they’re gonna try to launch in 2024. There’s just a lot of energy, a lot of money, a lot of momentum around the game at a time where if you accept my definition of golf as golf is modern golf, it’s the combination of on and off course golf, which there’s no question whether it’s going to grow. There’s so much energy and money being invested in and around it. New venues, our venues alone at Topgolf will add three to 4 million unique new modern golfers every year just on the venue installations alone. So okay, that’s essentially 10% growth for the entire modern golf ecosystem just on the venues.

Jonathan Boyar (38:57):

So by building these, I think the stats are 50% of the people who go to a top golf of, or not golfers, but 75% of them have a interest in playing golf after, is that correct?

Chip Brewer (39:13):

That’s correct. Although over time what you’re gonna see is even a smaller percentage of them are gonna be traditional golfers because as we build out the, so it’s already a little bit is it only makes sense, right? There’s only 25 million traditional golfers, there’s 28 rounding golf course golfers en course traditional golf grew last year by 500,000 golf course golf grew by 3.1 million and we’re gonna add 11 venues a year. 11 venues a year is gonna add three to 4 million more uniques, other people are doing more and then that’s gonna have a positive impact on the traditional game of golf because some portion of those, no matter how you research it, it always comes back that experience a top golf increases your interest and desire to learn traditional golf. And we’ve got some interesting stats, you know, on that. But there’s been just multiple surveys and they all come back with that. It’s just in a really great spot right now and the Netflix thing can only only help. I hope it has the same impact that it did on Formula One, but it’s gonna have some positive impact and it’s gonna build on these other things that are going on. Which candidly the biggest thing going on, you know, other than is the venue growth. We’re driving same venue sales growth and venue growth. We’re putting more golf clubs in people’s hands and they’re having a great time with it.

Jonathan Boyar (41:00):

So I just wanna just briefly touch on, on valuation, you know, one thing that has weighed on the stock is that investors believe golf is gonna be a pandemic fad besides people being able to work from home more often. What makes you think and also besides the funnel from from top golf that this is just not another pandemic fad because when you joined the company in 2012, they were talking about the death of golf.

Chip Brewer (41:29):

Yeah, golf’s been pretty low growth over, you know, an extended period of time it had that one, you know, nice run but then it’s been, we’ll call it stable Jon, but you know, your question’s a little leading cuz it’s sort of like asking Mrs Lincoln, you know, besides that, how was the play, right? <Laugh>, so top golf does exist, so it is one of the factors I, you know, you can’t factor that out. I do think that is one of the reasons like why did golf grow last year if the covid pandemic was going to recess and obviously it could have, I didn’t know, now you have to be arguing that it is gonna recess, but it didn’t recess last year so there was no reversion. What we have here is a delayed reversion and maybe, but not only did it not have a reversion last year we grew on traditional golf, 500,000 participants.


So it’s sort of running in the face of facts, the game of golf, the sport of golf has a lot of energy momentum and work environment, you know, hybrid work, remote work is clearly very good for it. The growth of top golf there didn’t ever exist, something like that. There wasn’t this 3 million new participants coming at the game the previously, so they’re fundamentally different situations and I understand why people would be concerned about a reversion, but most things that have reverted have already done that. The fear of a top secret delayed reversion is, is still, I don’t know how you would make that argument either, I guess.

Jonathan Boyar (43:31):

I guess it would have to be a deep recession coupled with work from home being much less profit.

Chip Brewer (43:38):

That’s right. And you still would have the top golf impact and all the other money coming in and and energy around the game to counter that. And golf has not been particularly sensitive traditional golf to a recession in the past other than the great recession in 2009, which it did go down low double digits. So the 10, 14% decline in golf equipment sales that year. But that was literally financial meltdown bigger than anything. It wasn’t a real, it was something extraordinary and other mild recessions were not that sensitive to it. I can’t answer the question as it relates to top golf, but you can see that Topgolf is the same venue. Sales have been ramping up, not down.

Jonathan Boyar (44:32):

Yeah, I mean I had a great time at Top Golf, but certainly wasn’t cheap by any stretch, but I had a great time. If we have a bad economic period, you know, are people gonna pay a couple hundred dollars to go to that? I, I don’t know if you looked into any research on that or just, you won’t know until you do it.

Chip Brewer (44:51):

No, we’ll know it if we see it Jon. We’ll obviously look for it, but I can tell you this, you know, you can look at our, we announced our same trend sales quarterly, I’m assuming the economy didn’t strengthen over the last year and our same venue sales are increasing during that period of time. I’m not here saying that’s not guidance. I’m not saying we’re gonna constantly grow or increase at an increasing rate, but we, there’s just no sign of it. So we’ve got a strong consumer, it’s engaged, it’s clearly on trend and that it doesn’t seem like a reasonable huge risk to us right now.

Jonathan Boyar (45:31):

Right now you’re trading at about, you know, we look at everything e v to EBIDA for the most part about nine times 20, 23 estimates below golf industry transactions. You’re really not getting any credit for the fast growing top golf top tracer business. What gives you the confidence that the street’s gonna eventually properly value you?

Chip Brewer (45:56):

Good question Jon. You know, that is a source of bewilderment at times. We went through a period right after we did the transaction where the stock went down, then it raced up and it went up to $37 a share at its peak and would’ve been some multiple in the high twenties of ebitda. And when people started worrying about a reversion and growth became a little more out of style, you know, we’ve traded down and you know, we do think we’re undervalued right now. I guess the faith is that if we continue to demonstrate that we’re gonna be able to continue to deliver profitable growth and we’re also at a point, you know, where we’re transitioning very quickly from, we’re not one of those businesses, were all of the cash flow is way out in the future. That’s the stuff that I understand. Some of the T we’re transitioning to positive cash flow this year. So we’re optimistic that as we can, if we can continue to perform at this level and generate strong growth and increasing profitability, the markets are usually pretty rational on that over time. They’re not always rational in the short periods and that creates opportunities for people. But profitable growth, cash flow, Jon doesn’t usually go outta style. So we’re gonna try to deliver on that.

Jonathan Boyar (47:27):

And you’re putting your money where your math is, you bought stock in the open market twice in the past year as well as the cfo. You know, how come the company’s not being as aggressive as as you are? Obviously you can make your own decisions for your own self personally, but is there any anything to read into that? Because

Chip Brewer (47:46):

We’re our capital? So we basically, it’s a simple playbook, Jon, when we did this deal with Topgolf, right, we committed our resources. We’re putting in hundreds of millions of dollars a year of incremental capital into building venues. So essentially our free cash flow became committed and it’s committed to building venues. The venues generate a 40 to 50% cash on cash return, the same venue sales growth has continued to scale, the venues are continuing to be more profitable. So we feel great about that allocation of capital. But we’re fully committed on that. And you know, we also want to maintain a leverage ratio as close to three or lower as we can. We’re a little over that right now. Buying back stock is essentially a capital allocation decision and I made my personal capital allocation decision. I don’t have the opportunity that the company has on building these venues, but we’re very excited about how we’re deploying that capital.

Jonathan Boyar (49:01):

If the street remains irrational and doesn’t give you the valuation that I think and assuming you think you deserve, would you ever consider spinning out a portion of top golf to help highlight the value of it?

Chip Brewer (49:18):

Well, we consider all things so you know, obviously Jon, we’re, you know, shareholder value is the first on a list of all important metrics that we’re focused on. So we’re sophisticated on that and are constantly evaluating different approaches to that. But I don’t really want to get into speculating on what different avenues might be on that. We’re gonna continue to execute. We think we’ve got a unique asset here in top golf Callaway brands. It’s, we’ve got structural growth, improving profitability. We’re gonna make that transition to free cash flow generation this year. We’re creating a leadership position and really a unique competitive advantage in what is a very attractive space right now. So we’re gonna focus on that for the moment.

Jonathan Boyar (50:14):

No, I think that sounds like a, a good plan and I, you know, I have to thank you Chip. This has been unbelievable hearing about your story, the top golf story, future of golf. You know, it’s one thing, reading about it is another thing, talking to you about it and going to the venues and, and seeing how exciting it is. And I just want to thank you for hearing on the world according to Boyar. Yeah, it’s great to be on Jon. Thanks for your time and thanks

Speaker 3 (50:42):

For including us. I hope you enjoyed the show. To be sure you never miss another world according to Boyar episode, please follow us on Twitter at boyarvalue. Until next time.


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About The Boyar Family Of Companies

Boyar Asset Management
We have been managing money since 1983 utilizing our proprietary in-house value-oriented equity strategies. We manage money for high net worth individuals and institutions via separately managed accounts. To find out how we can help you with your money management needs please click here

Boyar Research
Since 1975 we have been producing independent research on intrinsically undervalued companies across the market capitalization spectrum and in a wide variety of industries using a business person’s approach to stock market investing. To find out how we can help you with your research needs please click here

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Looking for Value in 2023? Use Boyar’s Forgotten Forty as Your Roadmap


Forgotten Forty 2023


Most investors would just as soon forget 2022. With many global indices set to end the year deeply in in the red, “safe” fixed-income investments proving not to be so safe after all, and many former pandemic highflyers decreasing by 70% or more, investors have endured a year of carnage. Except for energy shares (advancing 74%) and consumer staples shares (advancing 0.6%) , there has been no place to hide, with all other S&P 500 sectors  declining -2.4% to -37.0%  YTD as of November 22nd.

Midterm Outlook

Contrarians that we are, this negative performance, in view of the historical record of market performance following mid-term elections, increases our excitement about the prospects for a select number of equities in 2023. After all, based on data from Carson Investment, we’ve entered the most traditionally bullish period of the 16-quarter U.S. presidential cycle: since 1950, the fourth quarter of midterm years and the following two quarters have been the strongest, with the S&P 500 delivering average gains of 6.6%, 7.4%, and 4.8%, respectively.

FTX Collapse and Equity Implications

The collapse of cryptocurrency exchange platform FTX wiped out a staggering amount of wealth, and few can predict what impact, if any, the crypto meltdown will have on equities going forward. Regardless, recent events reinforce the importance of conducting deep fundamental research.

2023 : The Year of the Stock Picker?

As famed value investor Shelby Davis once said, “you make most of your money in a bear market; you just don’t realize it at the time.” Last year, strategists at major Wall Street brokerage houses were optimistic about equities prospects for 2022, but this year they are much less hopeful, with many calling for little to no stock gains in 2023. Perhaps the major indices will flounder in 2023, but we believe that good stock pickers are facing a golden opportunity, as we detail in our annual Forgotten Forty issue, now available for purchase.

Forty stocks, forty one-page reports—each focusing not only on what we believe the stock is worth but also, more important, on the stock’s catalyst: the reason we expect it to go up in the coming year, and the reason we believe that investors should consider owning it.

Not all members of the Forgotten Forty are traditional value stocks, but all are companies we’ve previously featured in our full-length research reports. Each is a name we believe in, a name whose “value” we know inside and out—giving us specific reasons to believe it will outperform in 2023.

Free Sample Reports and Our Special Preorder Offer

For more insight into the thinking behind our Forgotten Forty picks, we invite you to read five sample reports featured in last year’s Forgotten Forty issue.

After you’ve done so, we encourage you to check out our special bonus offer and gain immediate access to the Forgotten Forty 2023 issue. The bonus issues included will be provided upon release. 











The information provided herein (a) is for general, informational purposes only; (b) is not tailored to the specific investment needs of any specific person or entity; and (c) should not be construed as investment advice.  Boyar Research does not offer investment advisory services and is not an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) or any other regulatory body.  Boyar Value Group offers investment advisory services through Boyar Asset Management, Inc. (the “Adviser”), which is an affiliate of Boyar Research and is an investment adviser registered with the SEC.  Registration with the SEC should not be construed as an endorsement of the  Adviser by the SEC nor does it indicate that the adviser has attained a particular level of investment skill or acumen. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Research assume no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Past performance does not guarantee future results. Investing in equities and fixed income involves risk, including the possible loss of principal. Certain information has been provided by and/ or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Research is not responsible for third-party errors. This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research. Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein

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Finding Value In Small Caps

In a Yahoo Finance interview, Jonathan Boyar discusses catalyst driven stock ideas from Boyar Research’s 2023 Forgotten Forty report and why he believes small capitalization stocks are attractive. 








Important DisclosuresThe information herein is provided by Boyar’s Intrinsic Value Research LLC (“Boyar Research”) and: (a) is for general, informational purposes only; (b) is not tailored to the specific investment needs of any specific person or entity; and (c) should not be construed as investment advice. Boyar Research does not offer investment advisory services and is not an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) or any other regulatory body. Any opinions expressed herein represent current opinions of Boyar Research only, and no representation is made with respect to the accuracy, completeness or timeliness of the information herein. Boyar Research assumes no obligation to update or revise such information. In addition, certain information herein has been provided by and/or is based on third party sources, and, although Boyar Research believes this information to be reliable, Boyar Research has not independently verified such information and is not responsible for third-party errors. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Investing in securities involves risk, including the possible loss of principal.

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The Boyar Value Group’s 4th Quarter Letter

The Boyar Value Group just released our latest quarterly letter to clients.

Please find an excerpt of the letter below:

Our optimism about value shares reflects the continued valuation discrepancy between growth and value stocks. During 2022, value stocks outperformed growth stocks for the first time in 6 years (as measured by the S&P 500’s performance relative to the S&P 1500 Value), and we believe that continued outperformance is likely. Although the valuation gap between value and growth stocks did narrow during 2022, value stocks remain significantly cheaper than growth stocks.

Please click here to read the entire letter

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Disney, Uber, and 4 Other Value Stocks Poised to Shine in 2023

Boyar Research’s 2023 Forgotten Forty Report (Boyar’s 40 best stock ideas for the year ahead) was just featured in Barrons in an article written by Nicholas Jasinski.  The article discusses six stocks we find to be both undervalued and have a catalyst for capital appreciation.  Below is an excerpt from the article:

In 2023, it will pay to be choosy, says Jon Boyar of Boyar Value Group, a New York–based firm that includes Boyar Asset Management and Boyar Value Research. For the past three decades, the firm compiled a list of 40 undervalued stocks that it thinks will perform well in the year ahead. The so-called Forgotten Forty includes shares that trade at a discount to their potential value, with a positive company-specific catalyst likely to manifest in the year ahead.

“If a stock is selling at a significant discount to what we calculate an acquirer would pay for the business, and has a catalyst for capital appreciation, that’s very interesting to us,” he says.

To read the article in its entirety, please click here.









Important DisclosuresThe information herein is provided by Boyar’s Intrinsic Value Research LLC (“Boyar Research”) and: (a) is for general, informational purposes only; (b) is not tailored to the specific investment needs of any specific person or entity; and (c) should not be construed as investment advice. Boyar Research does not offer investment advisory services and is not an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”) or any other regulatory body. Any opinions expressed herein represent current opinions of Boyar Research only, and no representation is made with respect to the accuracy, completeness or timeliness of the information herein. Boyar Research assumes no obligation to update or revise such information. In addition, certain information herein has been provided by and/or is based on third party sources, and, although Boyar Research believes this information to be reliable, Boyar Research has not independently verified such information and is not responsible for third-party errors. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable. Investing in securities involves risk, including the possible loss of principal. Important Information Regarding Performance InformationPast performance does not guarantee future results

This article has been provided  to you on behalf of Boyar’s Intrinsic Value Research LLC, d/b/a Boyar Research, a Boyar Value Group company.

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Tom Gayner, Co-CEO of Markel discusses the evolution of Markel into a Fortune 500 company, the secret to success in the investment business and much more…


The Interview Discusses: 

  • The secret to success in the investment business.
  • His investment thesis on both Home Depot & Diageo.
  • Why investing through the covid crisis was harder than investing through the financial crisis.
  • How covid has impacted Markel’s insurance operations.
  • His thoughts on Berkshire Hathaway investing in Markel.
  • His observations of Warren Buffett as a fellow board member at The Washington Post.
  • How Markel decides whether to invest in private companies through Markel Ventures or in public securities.
  • Why he thinks it is possible for Markel Ventures to one day be larger than Markel’s equity portfolio.
  • Why most investors who tried to use insurance operations as funding mechanisms have failed.
  • How he decides to add to existing equity positions.
  • The advantages of having low turnover in his equity portfolio that most investors do not appreciate.
  • His thoughts on when it is appropriate to use leverage.
  • Markel’s capital allocation priorities.
  • His thoughts on the cable industry.

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For more information on the 2023 Markel Shareholders Meeting, please visit  www.MarkelShareholdersMeeting.com

About Tom Gayner:

Thomas “Tom” Gayner is Co-Chief Executive Officer of Markel Corporation, a diverse financial holding company including insurance, reinsurance, and investment operations around the world. Markel is listed on the Fortune 500 and is headquartered in Richmond, Virginia, with 61 offices in 16 countries. Tom joined Markel in 1990 and oversees all investing activities. He is also responsible for Markel Ventures, a wholly owned subsidiary which acquires controlling interests in manufacturing, technology, and service companies. Prior to Markel, Tom served as Vice President of Davenport & Company LLC of Virginia and as a certified public accountant with PricewaterhouseCoopers LLP. Tom serves as the Chairman of the Board of the Davis Series Mutual Funds and on the boards of the Graham Holdings, Cable One, and Markel. He is a member of the Investment Advisory Committee of the Virginia Retirement System. Tom is a graduate of the University of Virginia and The Lawrenceville School.

For any questions or to ask a copy of the Markel report, please email us at boyarresearch@boyarvaluegroup.com.


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Click Here to Read the Interview Transcript

Transcript of the Interview With Tom Gayner:

[00:00:00] [music

[00:00:05] Jonathan Boyea: Welcome to The World According to Boyar, where we bring top investors, best-selling authors, and business leaders to show you the smartest ways to uncover value in the stock market. I’m your host, Jonathan Boyer.

Today’s special guest is Tom Gayner, co-CEO and soon-to-be sole CEO of Markel, a Fortune 500 financial holding company with a market capitalization of about $18 billion with offices in over 16 countries. Tom also serves on the board of directors of Markel, as well as Cable ONE. He’s also chairman of the board of the Davis Series of Mutual Funds. Tom, welcome to the show.

[00:00:43] Tom Gayner: Thanks so much for having me. Good to be here.

[00:00:45] Jonathan: I’m really excited to have you on The World According to Boyar. I’ve been following Markel for years and I’ve always admired your business and what you’re trying to build. Boyar Research formally started covering Markel late this summer when shares were trading around $1,200 and our team published an extensive report where we made a case of why we believe it is worth over $2,200 per share.

Markel is really well known in the value investing community and some people have dubbed Markel to be a baby Berkshire. For those at home, less familiar with Markel, do you mind giving us a brief overview of your firm?

[00:01:18] Tom: Certainly. Markel’s first off, a fun place to be. We appreciate you guys checking in on us and following us and I enjoyed the work that you did and the report that you wrote.

We got our start back in 1930 in Norfolk, Virginia when a fellow named Sam Markel, who started the business, started out by providing insurance for the jitney industry, as was called, you’ll might think of it as the Uber of its day. In the early days of the automobile, there were veterans and people who had a car that were offering a nikel a ride sort of thing. They were known as jitneys.

It was a new industry. There was not actuarial data. That was not insurance as you might suspect. Accidents happened and people were looking around for who’s going to be responsible for that. Sam Markel was a member of the Norfolk City Council. He was also in the insurance industry. He very entrepreneurially said he’ll start a company to provide insurance for that.

That’s really where Markel started and it’s our legacy of being a specialty insurance company. We were fortunate in that over the course of the next 30 or 40 years, we had the growth of the automobile, the growth of the interstate highway system, and the long-haul trucking business. All of those were wonderful growth waves that Markel rode for quite some time.

It became a bit more of a commodity and the data became more actuarial. The profitability started to diminish and Markel started to diversify into other things that also coincided somewhat with the generational transfer between Sam Markel and his four sons, they became an agent of Lloyds of London again.

That focus on specialty insurance and things that other people might not do or not a commodity needed some underwriting judgment and artistry. They did that for some period of time. The third generation of Markels came into the business. This would’ve been in the 1970s or so, and they started building out an insurance underwriting operation, moving away from the agency model, really more towards underwriting.

Steve Markel, who was one of the three members of the third generation was the gentleman who led the IPO, helped separate what it meant to be a member of the family versus a member of the management team, brought in outside capital with the IPO, ultimately hired me.

The model was basically what we observed taking place at Berkshire where we had a specialty insurance operation that was willing to take the pennies of underwriting profit that they were making and invest them longer term. That’s where we pleasantly and favorably get that name of Baby Berkshire. Yes, we do indeed follow that model. I joined to be part of that effort of managing the investments and similarly to Buffet where that capital started with the insurance business. It morphed into investments and then into buying, controlling interests in various businesses in all kinds of different industries. We have three engines, we call them these days.

There’s the insurance engine, which is the legacy of the business. There’s the investment engine, which grew out of the insurance company. Every insurance company has an embedded investment operation, and then Markel Ventures, which is our collection of about 19 or 20 different businesses that operate in a variety of industrial and service fields.

[00:04:35] Jonathan: You’ve been in this business for quite a bit and one of your early mentors told you the key to the success in the investment industry is to survive the first 30 years.

In your first 30 years, you saw a lot. You had the savings and loans crisis, long-term capital, the dotcom boom and bust, and the global financial crisis. I’d love to hear how this helped prepare you to navigate through COVID in the last year, which to put it mildly, has been an extremely challenging environment to one, run a company and two, to be an investor.

[00:05:06] Tom: Thanks for reminding me about Mr. Reynolds. The gentleman you referred to as a mentor was a guy named Ned Reynolds and he worked at Davenport and Company in Virginia, which is where I started in the investment business. He was a spectacular mentor to me in so many ways.

That particular comment that he made to me was unsolicited. He just happened to be standing next to me one day and randomly said that. There were so many things that I can remember him saying that really weren’t part of a conversation, just statements, but that is one of the ones that stuck with me a tremendous amount. Now, the reference to 30 years, I think what he meant is generation. One of his other sayings was, “What you want in life is a young doctor and an old broker.” What he meant by that is that the day you graduate from medical school, in many cases, that’s going to be your peak level of technical knowledge of what’s happening in the world of medicine.

Then you’re out practicing and you learn different things, but in terms of staying on top of exactly what’s new, that might have been your peak moment. If you’re a broker, if you’re in the investment business, an investment advisor, counselor, it should be that each day that goes by, you should learn something and you should be a little smarter, a little better, a little wiser that the next time you see it. His point was that 30-year generational time frame. Normally, you’re seeing things for the first time through the first 30 years, and then you’re seeing the same thing the second time around.

You look in today’s market, all the things that happened, I mean, that are still unfurling with the FTX situation. Every financial story like that seems to unfold in roughly similar lines. There’s something that comes along, it’s new, it’s now well understood because it is new. It is described in very sophisticated terms or seductive terms such that money goes in, and at some point somewhere along the line, somebody wants to take a little bit more money out than what’s coming in and things seem to go sideways.

That has happened over and over and over and over again. Once you’ve seen it once or twice or 300 times, you should be a little bit better about not falling for the next time around or handling it better. That’s really the essence of what he was talking about through that story of lasting the first 30 years. I think there’s an epic amount of wisdom in that.

There’ve been some nuances to that. For instance, in the ’08-’09 financial crisis, by that time I’d been in the investment business about 25-ish years. I had told that story several times and good friend of mine reminded me of that. He was roughly the same age as me and he says, “Tom, I was hoping by the time we got to 25 years, we could round up to 30, but I guess we’re going to have to live through it.”

We did and we got through it, and now I’ve been at Markel for 32 years. It was basically year 30 at which time the COVID pandemic hit, and that was new to me. I had read about pandemics, but I had not had any firsthand experience with it. It did feel new. I’m hoping at this point we’ve crossed through the list of things that, at least you have had some familiarity with by the time they had come around.

This is a business where there just, is literally no substitute for experience. You can read about things, you can study things, you can be diligent, you can do your homework, but until you feel the visceral gut punches of what it means to live in a volatile market or not know what the next day will bring, you just don’t have the skills to be, an expert is not exactly the right word, but someone who can calmly deal with the circumstances you face.

The good news is, whether the 30 is a round number, whether we’re rounding or using truncation, I’m at least over 30. I think I’ve seen a good number of the things that one is likely to see and it just, it helps you have perspective about things

[00:09:03] Jonathan: In terms of perspective, what was more difficult investing through 2008-2009, the dotcom melt-up, and then crash or the COVID environment, which hopefully, is on the flip side of, but who knows, which has been harder for you in a professional sense?

[00:09:24] Tom: Frankly, the COVID’s been harder in a professional sense because in the ’08-’09 time, and again, I’ve been through ’98-’99, the dotcom implosion. In ’08-’09, you were looking at a balance sheet problem. Just leverage had been become too prevalent and the system of just too much debt.

I started out life professionally as an accountant. I can look at balance sheets so that I feel pretty comfortable in analyzing what debt is all about and not just the explicit debt that you’re going to see on a balance sheet, but the ways in which debt is hidden in structures. A lot of the derivatives type issues that you would have, a lot of going back to our early accounting days where people used leases and accounting treatments were such that you didn’t have to put the totality of the lease on your balance sheet.

I’ve been through rising interest rates when insurance companies more the life side than the PNC side, would have bonds on their balance sheet, which would help add costs rather than mark to market. Because if you’re in the market that impairs the capital too much. With the last couple of months and interest rates going up, that movie is playing all over again. All of those things, I had seen financial stuff before.

I lived my whole professional life in the financial world. I have not been a medical person so when you saw the pandemic come across and the human death toll that was happening there, I had zero experience, zero frame of reference, zero ways to understand that. That’s a more frightful thing to work your way through and less sense of internal confidence about, “Oh, I’ve seen this before, this is what’s going to happen next.” I did not have that at all. Thank God I made it through, we’re here.

I think and I hope very much on the other side, not just in the pandemic itself, but in understanding what it is that we as citizens, that we as governments should do should we be faced with these kind of circumstances again. I rather suspect people a lot smarter than I am, that say, this is the nature of the world and the idea of pandemics is not something that should be foreign to you. Because with the interrelated nature of travel, commerce, people going all around the globe for all kinds of reasons, we’re connected in ways that we didn’t used to be. That’s a good thing but it does connect to some risk of future pandemics as well.

[00:11:45] Jonathan: As someone who runs an insurance company that incalculable risk is got to be a really scary thing. Obviously, you have actuaries, et cetera, who are taking this into account, but you have some interesting lines of business, event cancellation, other things that almost are impossible to quantify. How do you go about doing that?

[00:12:04] Tom: Event cancellation, funny you should bring that up or not so funny, but I guess I can laugh a little bit at this point, that was probably the largest single source of loss for us in the pandemic. I don’t blame our underwriters or actuaries or anybody who was involved in writing that business from the word go because they were doing exactly what you would think they should do in the form of being disciplined and having a diversified risk.

If you’re insuring a wedding in New Jersey and a folk festival in upstate New York and a music festival in California and a wine festival in Oregon and a tennis tournament in England and a parade in Japan, this worldwide global spread of business. Boy, you think you’re doing a pretty good job of diversifying because what is something that’s going to happen that’s going to affect all of those things? A tornado or a hurricane, a weather event, all those sorts of things, which would normally cause a problem with events. Those geographically tend to be isolated.

The pandemic was something, it touched everything, every concert got canceled, every sporting event got canceled, every parade got canceled, every wedding got canceled. It was just something that we had never seen before. That said, that is not a business right now that we think we can price reasonably well because we’ve seen data that says all the techniques we used to manage risk and price that went through a period where that just didn’t work. We have not yet figured out how to properly price the risk that’s involved with something like that.

[00:13:36] Jonathan: Not that you needed it, but you received the investing world’s equivalent of the Good Housekeeping Seal of Approval when Berkshire bought shares in Markel. How did you find out they took a position?

[00:13:48] Tom: Same way everybody else found out, seeing the 13F filed. It was earlier this year, it was sometime during the first quarter of this year, that they took their position and we found out about it by their publicly disclosure of the 13F.

[00:14:01] Jonathan: Did you make any contact to the folks in Omaha?

[00:14:03] Tom: I’ve been very fortunate in that I started going to Omaha back in 1991. That was the first year I went to the Berkshire annual report. At that particular time, there were probably only about 700 people that attended that meeting. Buffett was not the celebrity then that he is now. You literally could go up to him at the annual meeting and introduce yourself and chat for a little bit. Actually, I did that back in 1991 and that’s good fortune to at least having some social interchange with him since that time.

Now, I was super lucky in that I was asked to serve on the board of the Washington Post company. I think that was back in 2007 or so. At that time Buffett was on the board so we were fellow directors of the Washington Post company for a number of years until he left that board. I got to have something of a professional relationship with him through that time and five board meetings a year and five board dinners and that sort of thing. I’ve studied him, I’ve read everything he’s written. I’ve had the good fortune of being able to chat with him directly. He’s been a spectacular role model and mentor so I was delighted and grateful when they showed up as owners.

[00:15:13] Jonathan: You were on the board of the Washington Post with him and you mentioned you got to read all of his letters, which everyone else who’s in the investing world has the opportunity to do. You got a first-hand view of him in action. There are things that people who haven’t read of all his letters in his interviews would be surprised about him or something that you can tell us about him that you found particularly interesting in terms of how he goes about business and how he prepares et cetera?

[00:15:41] Tom: One is, what you see is what you get. Buffett is almost super human in his dedication to being a great investor, a great leader, a great manager, a great historian, a great student of the game. He has been so good that sometimes people think, oh, there must be a magic trick involved or some freak of nature or some secret formula, whatnot. No, I think that’s what you get when you combine a pretty high IQ with a phenomenal work ethic and phenomenal concentration and surrounding himself with phenomenal people.

Whether that’s Charlie Munger, Ajit Jain, Greg Abel, Ron Olson, all those kinds of people that would be in his–, just on and on and on. If you think about, and he talks about the concept of 20 punches, 20 great ideas. We’ll take his top 20 people that he would’ve spent the most time with over the last 70 years and line them up and think about the collective IQ and talent and wisdom of whatever people he spends time with. Just an undiluted and unfiltered way to be extraordinarily good at this, and he’s done it for a long, long period of time, which is where the compounding really kicks in.

Morgan Housel, who wrote a wonderful book called The Psychology of Money, happens to pleasantly be on the Markel Board. He is a good friend and colleague and helpful counselor to us. I think the statistic, if I remember it, is something that two-thirds of Buffett’s wealth occurred after he became 60 years old. He spent a lot of time just pounding it out, grinding it out year after year after year after year after year of compounding and then he survived to where these compounding mechanics and math just create extraordinary numbers.

One thing I would urge people to do when you’re studying them, don’t overthink it. Don’t think there’s something there that isn’t. Look at what’s obvious and take things for what they are and try doing it for 30 or 40 or 50 years yourself and see how it works out. I suspect that it will work out relatively well. Maybe not as well as it did for him, but I think that would be fundamentally good way of trying to approach the investment business.

[00:17:56] Jonathan: Getting back to the traditional Markel Insurance Company, having a profitable insurance company, the beauty of it is each quarter you essentially get yourself inflows of cash to manage on a consistent basis. For the portion you decide to allocate towards equities, how do you decide to add to existing positions versus making new investment?

[00:18:17] Tom: Let me back up a second there before I answer that question because you said something very, very important and I want to make sure that your listeners get this particular part. Having a insurance business is profitable. Boy, that just rolls off the tongue. It’s easy to say, but very hard to do, and I want to thank the insurance folks on the Markel team because they are the ones who funded so much of what we’ve been able to do on the investment and venture side and it is hard.

There are other people who have tried to use insurance operations as funding mechanisms for investment vehicles, and generally speaking, that hasn’t really worked that well. I do think there’s some cultural reasons why that’s the case. If you think about investment type people, and here we are in New York n the center of some high-end investment-type talent. Investment people tend to be pretty well compensated, they tend to have somewhat pleasant lifestyles and maybe some ego in the game and that sort of thing.

If you’re an investment person, you want to be part of an investment culture that accepts and handles things in that way. If you’re part of an insurance organization, the insurance organizations are typically run by people who have come up through the realm of underwriting or sales or actuary or administration type stuff. It’s a grinding it out. You got to be detail-oriented and you got to just go after it day after day after day in small incremental ways, and you have to avoid catastrophic losses as opposed to make big gains, which is sort of the mindset on the investment side.

I think it’s fairly rare that you find an organization that culturally, a first-rate investment person and a first-rate insurance person would feel comfortable within the insurance side. There would be maybe a little scoffing or under appreciation of the discipline that first rate insurance people bring to the table. The insurance people might not be willing to pay the invest people as much as they think they should get. You look at birth Berkshire. It is the absolute archetypical example of a place where those two sides of the tent have leaned into one another, and you have absolutely first rate investment talent, ie Buffett, and first-rate insurance talent as exemplified by Ajit Jain,

the people at the Geico, National Indemnity and Buffett himself with his understanding of what goes on in insurance. I would posit that Markel, to some degree, has been that. We have a culture that has embraced both the details and the disciplines of insurance and investing at the same time. I’m lucky enough to be the investment guy and come up through the investment side, even though as a be responsible for insurance side as well. How that has practically played out is I’ve now been at Markel for 32 years and 32 years, if I’m doing my math right 12 months a year. That’s 384 months that I’ve been there.

On 379 of those 384 months, money has been deposited into the investment account from the profitable operations, both of the insurance business and now increasingly, Markel Ventures. Markel Ventures have been around since 2005. We’ve been profitable every single year since we started that as well. You use the phrase dollar cost averaging. You’re exactly right in that every month I have positive flows that I’m dealing with and I can choose proactively to make investments because, and I’m not just playing them on paper. I have cash flow to invest almost all the time.

That’s been a wonderful advantage over the years of compiling the investment record that we have, is we’re not dealing with one of the challenges that oftentimes investment people face in that their clients want to take money away from them after they’ve had a bad run. You probably should be giving them money and the clients want to give them money after they’ve had a great run you probably should tap the brakes a little bit.

[00:22:21] Jonathan: It’s 379 months of positive cash flow out of 384?

[00:22:28] Tom: That’s my swag estimate. The 384 is right. The 379 is– It might be 377, it might be 382. I don’t know. It’s the vast, vast, vast majority.

[00:22:37] Jonathan: Unless those four or five, six months were really bad, that’s an amazing record.

[00:22:42] Tom: I can remember why those four or five months took place, 9/11. That’s a month or two where, my goodness gracious, you’re going to get your bearings and make sure that the world is on its axle and the early days of the COVID pandemic. Those really were the only two periods where in a month or two or three where we were finding our footing and making sure we were somewhat cognizant and somewhat aware of what the world really was.

[00:23:08] Jonathan: You have a big portfolio in terms of names, but it’s relatively concentrated in terms of positions and the same. You have some very low-cost basis in companies like Home Depot, Diageo, some other great names. Is it psychologically hard to buy more of those names over time? How do you invest as money is coming through?

[00:23:28] Tom: Fortunately, that’s psychologically, for some reason, it’s not hard for me. Let’s take each of those examples you cited. Home Depot, basically in the ’08-’09 crisis, housing, obviously, was one of the epicenters of where the problems were. I’m not a handy person. My in-laws one time gave me a toolbox and my wife just laughed and laughed and laughed, and I think I gave it to my son. I’ve never used one of them. I’m just not good at that kind of stuff. Now, as a homeowner, there have been times when I’ve gone into either Home Depot or Lowe’s, and by the way, we own both of them.

I know that there’s something I needed to do to keep my house maintained properly, and those are the places that I got it. I never spent money there voluntarily, shall we say. It was my observation that many times when I was spending money at one of those places from my house, I had no choice in the matter. If I went in my house not to fall down or rot or have lights that work or plumbing fixtures or what have you, it had to happen. When I looked at housing stock that exists and just the maintenance load that exists, I thought those were spectacular businesses.

Whatever happened on the financial side and debt side and whatnot, they were better at distributing home maintenance equipment and supplies and everything for the existing stocks, set new construction aside, than anybody else. We started buying it and fortunately bought pretty good-sized positions in both of them from time to time since then. While that was the dramatic big add, I’ve added to it as recently as this year added to those stakes.

I don’t find it uncomfortable to buy more, and in fact, almost just the opposite because you get to know a company and you live with them and you see them do what they said they would do and live up to their promises and you get to know the management a little bit when you see some wobbliness in the price or some short term price action. That is a very comfortable thing for me to step into and buy more of.

Similarly, Diageo, I think we’ve probably owned that for 25-plus years at this point. I can’t recall a single incident when I bought a lot of it. It’s just something that I added to bit by bit over the years and can’t call a single catalyst as to why this year’s batch of Johnny Walker Black Scotch motivated me anymore or less than prior years. I’ve always been comfortable with their business and the way they run things. We’ve added to it over the years.

[00:25:53] Jonathan: Home Depot, in particular, is just such a well-run business. Shameless plug for The World According to Boyar. One of our first big guests was Ken Langone and then Frank Blake who did a fantastic job turning around that company. It’s amazing how they continue to be so profitable and it’ll be, you have any thoughts on, with people probably not buying new houses anytime soon, should the remodel business be strong going forward? What do you think?

[00:26:23] Tom: I think it will and in point of facts, the case that says that new home sales are under pressure and right now when the church rates rising, they are well every single day that goes by that I live in my house, all I know is it needs more maintenance. I grew up in a farmhouse that was 250 years old my parents bought that before I was born and they owned it, their whole lives and it never didn’t need something.

[00:26:51] Jonathan: I hope you’ve been enjoying the show. Boyer Research will be releasing our annual forgotten 40 soon, which contains our 40 best catalyst-driven equity ideas for the year ahead. To learn more about how to purchase this special issue from Boyer Research, please visit boyer research.com/2023. Now back to the show.

[00:27:14] Tom: In terms of your portfolio, I looked at your 13F, you have about 130 stocks, and you have a lot of responsibilities. Soon you’ll be running the whole company. You’re co-CEO now. In January you’ll be the only CEO. You have two other people helping you manage equities. What kind of information do you need to stay on top of the stocks that you own?

[00:27:36] Tom: Well, if I can find the next Berkshire or the next Home Depot, not that much. One or two ideas a year really power the investment returns and we do tend to hold on to things that we own. Berkshire was the very first stock I bought from Markel when I joined in 1990. Home Depot, we just talked about that would date back to 2008, which is now 14 years.

The portfolio turnover, generally speaking, is a single-digit percentage. We certainly try to be reasonably aware of what the current quarters are and the current developments. We’re not trading these like many other operations. Nothing wrong with trading, not right or wrong, it’s just different. We tend to buy and hold things. That also creates some tax efficiency in that the unrealized gain tends to build over time.

That would really be a strong argument against selling because if we have something that’s appreciated dramatically. When we sell that for a dollar, we don’t have a full dollar to reinvest. We have $0.75 or $0.70 or something like that. The amount that your replacement has to go up to replace the real value that you’re receiving upon selling after you pay the taxes is pretty dramatic, which creates a bias.

Some might call it an endowment effect, and some might call it a flaw, but it has worked out. There’s also some pretty nice math to that thing that has gone well and that managements do a good job of and are good business, oftentimes those are pretty persistent. I think there’s the statistic that if you want to make a guess as to which show on Broadway will play the longest, the best answer to that is the one that has already been playing the longest.

What that means is you have crowd-tested data that says this is a good show. Shows can have runs that last years. You might think, that show’s been there three or four years now. Come on, it might be there 15 years after that. Whereas the new thing that just opened and, maybe some people are buzzy about it, talking about it, that might be gone in 30 or 90 days. There’s a lot to be said for the persistency of some of the leading companies that we have and the amount of day-to-day work that’s associated with owning Berkshire and Home Depot. I got to tell you, it’s not that much.

[00:30:01] Jonathan: We’re big believers too in the magic of tax-deferred compounding your investors complain about investment management fees, but the biggest costs, at least in my view, most investors pay by far is taxes. By deferring those gains as long as possible, you don’t have to pay the tax man. At some point, something might get so overvalued, you might want to trim or sell. What would make you want to sell a profitable investment?

[00:30:27] Tom: When I think there’s been a fundamental change in the business. Our turnover is not zero, nor should it be that zero or 10% range. I do look at every single name that we own. We think about it, the [unintelligible 00:30:41] and Tyler Brown who work on the equity team with me. I mean, this is the sort of thing we would talk about and say, is there anything that has fundamentally changed that we probably ought to go ahead and sell? It’s not an act of topic of conversation, and it does get acted upon with some discipline and some regularity.

The other great thing that happens at Markel if you look at our top shareholders, you mentioned Berkshire. I’m not going to put them in this category right now, but somebody like your Chris Davis, folks at Baillie Gifford, who are very large shareholders, the folks at Principal who are very large shareholders, I tend to talk to them. I tend to see them at the Berkshire meeting. I hope that they’ll come to the Markel, maybe, which is on May 17th in Richmond, Virginia this year because the informal gatherings where you get to talk to other investors, frankly, I joke with those people when they own Markel stock.

I say, here’s the thing, you are smarter than I am, but I’m managing money for you. If you see something that I’m doing through the public 13F files, this is not insider conversation at all. If you see a name there that just seems like, why is that there? Let’s talk about that. Similarly, if there’s an idea that you have that’s a great idea, and it’s public, it’s 13F, you’ve bought as much of it. The very first person you ought to talk to about that is me because, in essence, that’s a way of getting more of that holding into your portfolio when it’s owned through Markel.

Conversations that have been long term in nature and with long duration friends, that’s a very productive way to help manage the portfolio of what’s in the Markel portfolio. I joke, while I only have two people working with me on the Markel payroll. I got 20 unpaid volunteer consultants whose interest is for Markel to succeed and for the investment portfolio to be run well. Would put you in that category to some degree in that, you’ve written about Markel, we’re having this conversation.

You’ve been aware of Markel for a long time. If we were both to write names of people we knew in the investment business down, there’d probably be a fair amount of overlap or one degree of separation. There is epic value in the friendliness that exists in this business from time to time to try to help one another in ways that both of you are better off.

[00:32:59] Jonathan: Thank you for putting me in the same conversation as Chris Davis and Davis Funds. That’s a really interesting way of looking at it. You have a really– It’s simple but not easy investment style where there are four pillars and one of the pillars is staying away from companies with high leverage, which makes sense. John Malone is kind of the master using leveraging. I noticed he’s in your 13Fs through I think Liberty Sirius and Liberty Broadband. Why does he make the cut even though they’re highly levered names?

[00:33:31] Tom: I think John Malone and the companies he’s led and the teams that he’s assembled, while they use leverage to build it out of nothing. If you go back and read the Cable Cowboy book, this sort of origin story in the cable business. After a period of time, you just have to tip your hat and say this guy is smart. He knows what he’s doing. I think his team does as well. There is some diffusion of the risks that happened because he’s connected to so many different entities, and some of those entities would have different leverage profiles and different cash flow profiles.

Some of them would be more appropriately leveraged than others. Even within our own business where we are on the low end of leverage in the way that we run things within Markel Ventures. There are some businesses within those 20 companies where we do use some leverage and it’s appropriate because those businesses tend to have a fair amount of fixed assets to them. Real estate type things or fixed assets, tangible assets, it’s appropriate to use leverage for that, especially in the era that we’ve just been in where interest rates have been extraordinarily low. We’re not dogmatic about zero leverage.

There are other businesses where the assets tend to be a little bit more intangible. The old joke about if you have an advertising agency, your assets could go out the elevator every night or in today’s world, log off their computers remotely, wherever they are. The point is, those sorts of businesses should have less leverage. Look at things in more than one dimension. Leverage versus no leverage is not a conversation you can have in isolation. You have to say, what kind of business is this? What kind of people are running it? How good have they proven to have been? Are they new at this? All of those factors go into what comfort level you should have with leverage.

[00:35:24] Jonathan: In also how you structure it. Malone is the master craftsman and structuring some of these things, Warner Bros. Discovery, which, obviously, has been a disappointment thus far. Most of the leverage isn’t due till 2040 and is at 3% or 4% fixed rate. It’s pretty astounding.

[00:35:39] Tom: In fact, I’ll tell you this story, I don’t know if this is going to make it through the editing process or not. This goes back probably 15, 18 years or so. One day I came to work and I opened the Wall Street Journal and there was a story in there about Walt Disney having just sold an issue of 100-year bonds and maybe the interest rate on them was 5.75% or something like that. I saw that and I went into our CFO’s office and I said, “We got to do some of this.”

I’d further joked, I said, “That 100-year bond they just sold,” but they were refinancing a 100-year bond that is 6% coupon that had a 5-year call and that was almost dead on exactly what the circumstances were. Anyway, we called our bankers, and again, this is an 18 or 20-year-old story and our banker said, “Walt Disney, that is a well-known consumer name. Markel, nobody’s ever heard of that. Nobody’s going to give you 100-year money.” I pouted a little.

The very next day there was a circumstance, I was looking at something and I don’t know if you know Eskimo Pie, the dessert Eskimo Pie. Eskimo Pie at one point was actually owned by Reynolds Metals, which is a Richmond-based aluminum company. The way Reynolds Metals came to own Eskimo Pie was there at some point 30, 40, 50 years, whatever, when Eskimo Pie couldn’t pay their bill for the aluminum wrappers that they put Eskimo pies in. Reynolds ended up owning the company. They ended up spinning it out and it was a publicly traded separate entity that had a market value, maybe $20 million, $25 million.

I said to our CFO, I said, “We should buy Eskimo Pie. Then changed the name of Markel to Eskimo Pie.” Then that way we could call people up and say, “You want some Eskimo Pies?” Who could say no to that? Now, needless to say, that was one of those silly ideas that I have that did not get executed. The point is that you’re just making terms and conditions that matter a great, great deal. In the last board meeting we have, I put some documents together for our board talking about that particular point in specific.

I think it was last year during calendar year 2021 that the Austrian government sold some 100-year bonds. Now, the Austrian government, I’m going to say that’s a pretty good credit. It’s not bulletproof, and the range of credit quality, they’re right up there. That’s a credit-worthy thing. I think the coupon on it, if memory serves, was 0.85% for a 100-year bond. Those bonds today are trading at about 48%.

Now, some people call that bond investing safe. If you go down and are buying a 2-year treasury at 3.7% or something like that, whatever the rate is, okay, I get that. That’s pretty safe. I think you’re going to be paid back. The inflation-adjusted and the nominal dollars that you’re going to get are going to be recognizable.

The world probably not going to change in 100 years. That’s insane to put money out for 100 years at a 0.85% interest rate just strikes me as silly. Point is, if at Markel we were offered the opportunity to sell 100-year bonds at 0.85% and put debt on our balance sheet, we are going to do that. I don’t think that offer is probably going to be forthcoming anytime real soon.

[00:38:57] Jonathan: Crazier things have happened over the last 10 years.

[00:39:00] Tom: And they have and here’s the good news, they do. By going to work every day, by just trying to be rational, to be thoughtful, to read the paper, to study what’s going on, to be aware of markets, you’re going to be presented with opportunities from time to time in irregular fashion to do things which will have benefits for years and years and years to come.

Sometimes that’s like Home Depot and Lowe’s in the middle of the housing crisis where I’m having to spend all this money there as a consumer and I didn’t want to. I thought, “That’s a really good business,” and that’s one of our large [unintelligible 00:39:31] these days.

[00:39:32] Jonathan: You’ve been a member of Cable ONE’s board for quite some time. Cable companies like Comcast and Charter have been horrific performers of late due to fears over Fixed Wireless Access. Is this as big of a thread as the market seems to be telling us? Should we read into the fact that Markel has low exposure to cable companies as a percentage of the portfolio, that you’re not bullish in the long-term aspect of that type of business?

[00:40:01] Tom: No, that’d be an overread, and in fact, I personally have been on the Cable ONE board. I’ve personally bought some stock recently in Cable ONE because the price action seems rather dramatic to me, shall we say, we’re also shareholders of Comcast. We do have some investments in the cable business. Cable’s a funny industry and the stocks of Cable ONE, Comcast, Charter– I’ll just talk about those three because I think it’s more fair to talk about those than some of the other ones. I think the stocks are way more volatile than the business itself.

If you go back into Cable ONE, take that as an example, when that first came out as a spin-out of Washington Post, Graham Holdings, I think the first trades were roughly at about $350 a share. It subsequently went up. Cable ONE had a very differentiated strategy. Tom Might, who was the CEO of the company at the time, was very public in the idea of unbundling and he thought carrying the video was really not a profitable activity for the cable companies to do. He really saw the splitting of the broadband connection versus what you were watching ahead of the curve. Cable ONE was criticized for that and then came to be celebrated for it and the stock went up a bunch.

Now, that was added to and magnified by the pandemic when amidst quarantine, amidst working from home, having a broadband connection to your house, that’s oxygen. You would think of that like oxygen, like your water connection, like your electric connection. You just can’t function in the modern world without it. The growth rates went up and Wall Street has a tendency to really love growth and assign pretty high multiples to it.

I don’t know about you, but when we were talking about writing the names on a piece of paper, if I had to have a piece of paper and write names of people who don’t have broadband connection these days, there’s not that many. These include people who live out in the country and rural places. The growth rate of new subscribers has diminished from what it was a couple of years ago. Not just Cable ONE, but Comcast and Charter as well. Those stocks are down a bunch as Wall Street seems to be rerating the fundamental growth rates of new customer acquisition.

Now, while new customer acquisition may be at a slower rate, maybe more population-constrained, I don’t think you’re going to lose customers. Nobody is giving up their broadband connection. I think the dependable recurring nature of the cash flows in that business, and you can also spend a little less on CapEx when you’re not adding customers so much. They seem like pretty good businesses to me, which is why I bought some personally and why Markel has bought some.

The third layer of that, and again as Buffet said, he learned investing from Ben Graham, he learned about managing the business from Andrew Singleton. Look at Singleton’s behavior at Teledyne in response to what happened in stock market volatility. When the market was up, Teledyne would use their shares as currency and raise capital. With Cable ONE, we did too.

When the stock was pleasantly valued, we did raise some capital and I think in some pretty good structures. It’s a matter of public record. You can look at the queues. We’ve been buying stock back in. I think in the face of stock market volatility, Cable ONE has acted rationally and I enjoy being associated with the company because they’re interested and concerned, and motivated by acting rationally, which is all I ask of people. It’s a fun company to be connected to.

[00:43:40] Jonathan: I just want to talk a little bit about Markel Ventures. You started in 2005, but you started thinking about it in 1990. In 2005 you launched it, where you purchased controlling stakes and businesses. That year Ventures had about $2 million in EBITDA. Last year Ventures, I think, had about $400 million or so. Would you be surprised if one day Ventures value is significantly greater than that of the equity portfolio?

[00:44:08] Tom: No, and really the way that that would come about is just trying to be rational. One of the beautiful things at Markel is we really have a 360-degree view of where we can allocate capital. The first choice and the favorite thing that we would do in allocating capital would be to fund businesses we already own. Where things are going well and the people who are running those businesses have the opportunity to deploy capital, earn good returns on it, and they’re already inside the tents, they’re already proven winners. That’s number one on the list. We fund them first.

The second is where there are opportunities to buy a new platform, to buy something different, and add it to the kit bag and let them grow and prove themselves over time. Third is we can buy publicly traded securities, whether those are equities or debt. Fourth, we can buy in our own stock. It’s in that one, two, three, four order, but all four can be taking place at the same time simultaneously, which is our circumstance where we sit right now. We really don’t think about a target as to how big insurance should be or how big ventures should be.

What we think about is on every single day when we come to work, we think what is the logical thing to do with capital? If that answer would point us in a certain direction disproportionately for a certain period of time, that’s going to become bigger and that’s an outcome, not a goal or a target.

[00:45:31] Jonathan: When someone joins the Markel family, you buy their business or controlling stake in their business, how much autonomy will you give them? How much attention are you paying to what they’re doing on a day-to-day basis? How does that relationship work?

[00:45:47] Tom: We try to give them as much autonomy as is humanly possible. We are a public company, we file public company financial statements. We get monthly financial statements from each of the businesses within Markel Ventures. We have quarterly board meetings as a normal process with the Markel Ventures companies. We review the annual budgets for the Markel Ventures companies.

The managers in those companies would have capital expenditure authority limits and decisions that below a certain size, they make completely on their own basis and try to do the best for their company. If something comes up, a merger opportunity, an acquisition, a capital expenditure that’s larger than what is budgeted or intended, that’s the thing we need to talk about off-cycle and middle of the month or between dates in the quarter. We really try to have a fun and business-like mutually reinforcing relationship with the people who run those businesses but make no mistake.

The people who run those businesses are the CEOs of those businesses and we back them and give them as much autonomy as we possibly can. We try to impose as little corporatocracy as we possibly can because we want the people running these businesses to have a sense of ownership and pride that this is their business. This is what they identify with and build it out over a long period of time. Other companies do that in different ways and I’m not going to say it’s right or wrong, it’s just different. Our approach is one that fosters as much autonomy as possible.

[00:47:19] Jonathan: A lot of these people whose business you bought either their family businesses or their entrepreneurs so it’s got to be a huge adjustment for them. How do you incentivize them in terms of either their pay package or whatnot to continue doing what they were doing?

[00:47:35] Tom: I think the word incentives is oftentimes defined and understood solely in the context of money or finances. While that is important, there’s more to it than that. There are cultural incentives. It is a point of pride for some people that oftentimes these family businesses are usually not first-generation family businesses. They’re second or third, or in one case, a fourth-generation family business that we have purchased.

There’s a bit of identity that comes with that heritage of running a family business that the home that Markel offers to somebody like that, they’re wired the right way. They’ve been wired that way since birth to think generationally and make sure that the next generation gets a better business than what the previous generation did so that’s very helpful.

In terms of the financial stuff and the financial stuff is very important. One of the hallmarks and tenets of how we would design incentive systems is multi-year. Generally speaking, we do the very best we can to have as long a time horizon as possible for the way somebody would earn financial incentives. Personally, for me, my incentive compensation is based on a 5-year rolling average. Every year at the end of the year, we’re not just toting up what happened this year, we’re toting up what happened the last 5 years and the next year, the oldest years are going to roll off and the newest year is going to roll in.

In essence, again, I’ve been there 32 years. You get used to thinking in forever terms when that’s the way you do things. The typical timeframe that would often be in place at most of the is 3 years. I would be happy if it was 5, would be happy for 10, I’d be happy if it was 12, but 3 years is already weird enough compared to what most other people do that tends to create that length and in a time horizon that’s different from what most other people do but it’s very helpful to that.

[00:49:34] Jonathan: Now, it’s early December 2022, the capital markets, I wouldn’t say are frozen, but it would be pretty difficult for a leverage deal [chuckles] to get done. Now with Markel Ventures and you have obviously your own financing, are opportunities being shown to you, is that now a competitive advantage that you are a willing cash buyer?

[00:49:55] Tom: It is. Let me answer specifically your comment about the year-end coming. I can pretty much promise you we’re not doing a deal this year. [chuckles] Here it is. We’re December 6 or 7th or whatever it is today, right now, just to do legal postcards back and forth between now and year-end is highly, highly unlikely [unintelligible 00:50:13] financial market side.

Now, if you went back and you read the annual report for the last couple of years or listened to conference calls or anything, I would have said that given the pricing that existed in the private equity world, it would be unlikely for Markel to buy something this year in 2021. We did buy a couple of businesses. 2020, same story. 2019, same story.

They all took me by surprise, and to some degree, they were inbound phone calls.

Now, the amount of spread between what we think things are worth and what they were trading for in the market just kept getting wider and wider, such that, again, I just kept saying, it’s highly unlikely for us to be able to buy anything, but some unique or special circumstances came about that we were able to.

That did not happen in 2022, and I’m pretty sure it won’t. That said, prices are coming back down, interest rates are going up. The leverage transactions that are out there are being re-underwritten. Our phone is ringing more today with inbound calls than what would have been the case six or nine months ago. Will we act on one of those? Probably. Will that be in 2023? I don’t know. We’re having conversations and we’re talking to people, so we’ll see.

Now, that said, even within this year where we didn’t do any new whole businesses, we did do some expansions of some of the businesses we already own where they were able to buy a competitor that they would have known. Those were not massively big deals to Markel very large.

They were big deals to the people who did them. Markel’s ability to be ready, willing, and able to fund and backstop those deals is a very important incentive for the people running those businesses. Again, that’s partially a financial incentive. It’s partially pride. It’s partially just the fun of being part of something that’s growing. All of those things are non-quantitative aspects of what incentives really mean.

[00:52:12] Jonathan: You’re having your annual meeting, I think it’s May 17 down in Virginia. What has been like the last couple of years going to those meetings?

[00:52:21] Jonathan: Thanks for asking. Yes, May 17, 2023. I hope you and anybody who’s listening will be here. Going back a couple of years, I guess this would have been 2021. You got to make plans. It came to be that in January, February, and we’re thinking about the upcoming annual meeting in May that was still in the midst of quarantine, and my bias if possible, I wanted to have the meeting live because I’m a social person, I like people. Again, that building of community and just hanging out with people is a very valuable thing.

We were sitting around the table at lunch and four or five of us, and just spitballing ideas, where could we possibly have the meeting where we could accommodate the world in which we lived but still try to get people together? I came up with the idea that out at the Richmond Raceway, there’s a concert venue out there and it’s a 6000-seat arena and it has a cover on the top for the roof, but the sides are open air.

Rather than have it inside in a theater or something convention center like we did in previous years, we try to meet people halfway so at least it is an open-air venue. We called out there and really for some amazingly low price, and I mean amazingly low price, we were able to book that venue. We did. Thought that would be fun to give that a try and we also wanted to be fun to give people a reason to be there. We decided, after the meeting itself we would have food trucks, we would have beer trucks and we would have a band.

You asked what it was like. I called the band that somebody around the table had recommended and I spoke with the leader of that band and made inquiry about what music they played and whatnot. I said, “How long will you play?” His response was, “How long do you want me to play, man?” He hadn’t had a gig in two years. They were just glad to be there. We had over 500 people come. The people were glad to be there. For so many of them, it was the first time. Being in a social crowd and the hugs, the joy of being together again, it is really quite vivid and very much on display at that.

Then the next year we did the same thing and we went back to the raceway. This year we’re going to go to the grounds of the University of Richmond and we’ll be in the arena where the basketball games are played. It’s called the Robin Center and we’ll have fun and that will give us the opportunity to host a lot of people. First year we did it a couple of years ago we had 500. Last year we had a little over 1,000 people. At that particular rate, we might have 2,000 people and that would be great. We’d love for people to come. It’s a great opportunity to see the business leaders of Markel

[00:55:00] Tom: to mix and mingle with the crowd, to ask questions that you have, but really to get to know one another.

Again, it’s just going back to how incredible the Berkshire experience for me has been over the years, the number of people that I’ve met in and through Omaha over 30 some years of going, it’s changed my life. It’s made for an entirely different trajectory and formed a lot of relationships. People all over the world come there and it’s real crossroads of the world to connect there. We’re hoping Richmond, Virginia turns into a variation on a theme on that particular idea where people from all over come and connect with one another and have a day and a half of fun in Richmond, Virginia.

[00:55:38] Jonathan: Sounds like a fantastic event that everyone should consider going to. Tom, thank you so much for your time. It was great having you as a guest and learning about yourself, about Markel, about how you pick stocks. It really has been fantastic.

[00:55:52] Tom: Thank you. Appreciate it.


[00:55:55] Jonathan: I hope you enjoyed the show. To be sure you never miss another World According to Boyar episode, please follow us on Twitter @boyarvalue. Until next time.



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About The Boyar Family Of Companies

Boyar Asset Management
We have been managing money since 1983 utilizing our proprietary in-house value-oriented equity strategies. We manage money for high net worth individuals and institutions via separately managed accounts. To find out how we can help you with your money management needs please click here

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Since 1975 we have been producing independent research on intrinsically undervalued companies across the market capitalization spectrum and in a wide variety of industries using a business person’s approach to stock market investing. To find out how we can help you with your research needs please click here

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The Boyar Value Group’s 3rd Quarter Client Letter

The Boyar Value Group just released our latest quarterly letter to clients.

Please find an excerpt of the letter below:

Do Higher Interest Rates Mean That Stocks Need to Decline?

Pundits see higher bond yields as a sign that equity valuations need to further compress (after all, higher bond yields are competition for stocks), but a look at the historical record contradicts that notion. According to Bespoke Investment Group, the yield on the investment-grade bond index is ~5.6%, right around the 35-year median yield, and at the same time the P/E of the S&P 500 is close to its historical average, which Michael Santoli sees as a sign that “‘average’ equity valuations are not far out of whack.” Approximately 7 months ago, investors were willing to accept that same 5.6% yield they are currently receiving for investment-grade fixed income for lower-rated junk bonds. Times sure have changed! As Santoli also points out, “the most extreme overvaluation of large-cap stocks and wildest speculation in no-profit upstarts occurred at a time when Treasuries yielded 5-6% in the late-’90s. Appetites and crowd psychology drive markets in the shorter-term, not math.”

Are We in the Run-up to a Small Cap Rally?

Small cap companies are particularly attractive, in our opinion, and have been hit hard during the selloff, with the S&P 600 (an index consisting of smaller capitalization companies) declining 17% YTD through October 25. Not only are they historically cheap, trading at just 11.5x expected earnings (below their 20-year average of 15.4x and the S&P 500’s 16.5x), but they are significantly more insulated from the negative effects of a strong U.S. dollar than multinational companies that sell more of their goods/services overseas. According to the Wall Street Journal, components of the S&P 600 generate just 20% of their sales abroad versus 40% for the larger-cap S&P 500.

Please click here to read the letter









This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Value Group (“Boyar”) or its affiliates. Past performance does not guarantee future results. This material is as of the date indicated, is not complete, and is subject to change.  Additional information is available upon request.  No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at www.advisorinfo.sec.gov. Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions

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Volatility & Opportunities In Today’s Geo-Political & Economical Turmoil

Jonathan Boyar was interviewed on the Rollings Stocks program. He discusses where he is currently finding value despite both geo-political &  economic turmoil as well as what investors should be focusing on amid the volatility. Watch the interview below for insights and learn what businesses he believes are positioned to do well.








Past performance does not guarantee future results. This material is as of the date indicated, is not complete, and is subject to change without notice.  Additional information is available upon request.  No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Nothing in this video should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable.   Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors.  This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research.  Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Boyar Asset Management, its employees or affiliates may own shares in any of the companies referenced in this email.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at www.advisorinfo.sec.gov. Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.  Clients of Boyar Asset Management own shares of Bank of America, Cisco and MSGS.

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Opportunities For Long-Term Patient Investors Who Can Withstand The Current Volatility

Jonathan Boyar was interviewed on Yahoo Finance where he discussed several opportunities for long-term patient investors able to withstand the current volatility.











This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by Boyar Asset Management (“Boyar”) or its affiliates. Past performance does not guarantee future results. This material is as of the date indicated, is not complete, and is subject to change without notice.  Additional information is available upon request.  No representation is made with respect to the accuracy, completeness or timeliness of information and Boyar assumes no obligation to update or revise such information. Nothing in this video should be construed as investment advice of any kind. Consult your financial adviser before making any investment decisions. Any opinions expressed herein represent current opinions only and no representation is made with respect to the accuracy, completeness or timeliness of information, and Boyar Asset Management and its affiliates assumes no obligation to update or revise such information. You should not assume that any investment discussed herein will be profitable or that any investment decisions in the future will be profitable.   Past performance does not guarantee future results. Certain information has been provided by and/or is based on third party sources and, although believed to be reliable, has not been independently verified and Boyar Asset Management or any of its affiliates is not responsible for third-party errors.  This information is not a recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security, including an interest in any investment vehicle managed or advised by affiliates of Boyar Research.  Any information that may be considered advice concerning a federal tax issue is not intended to be used, and cannot be used, for the purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. Boyar Asset Management, its employees or affiliates may own shares in any of the companies referenced in this email.

Any results mentioned, do not necessarily represent the results of any of the accounts managed by Boyar Asset Management Inc., and the results of Boyar Asset Management Inc. accounts could and do differ materially from any of the results presented. While the results presented show profits, there was the real possibility of a permanent loss of capital. This information is for illustration and discussion purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Boyar Asset Management Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at www.advisorinfo.sec.gov. Please contact Boyar Asset Management Inc. at (212) 995-8300 with any questions.  Clients of Boyar Asset Management own shares of Bank of America, Chubb, Cisco, HanesBrands and Apple.  

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