Let's talk about what investor does in this new environment of increased
inflation and increased interest rates. First of all, tell me what's going on
with your company. Are you seeing less deal flow now?
Just the opposite. We're seeing more deal flow.
We're seeing more situations where companies are having difficulty figuring
out what to do. We're seeing situations where
nine months ago financing a transaction X, Y, Z size was nothing.
Now, as you know, as you said, money was free.
What's changed dramatically? I mean, think about the impact of the
doubling of interest rates in eight weeks.
W just eight weeks earlier, interest rates were two and a half to
three and now they're five and a half to six.
That's an enormous change and it's gonna slow down
everybody's activity. It's going to for sure, impact getting
deals done. But in our particular case, because
frankly, I've often time and told the world that, you know, when I'm
liquidity, the stock market can't go down, it only goes down when I'm
illiquid. And here I am sitting there with a level
of liquidity I've never experienced in my life because my focus for the last
three and a half years has been and nothing more important than liquidity.
So you've got a significant deal flow if anything is bigger than it was before.
What about the quality of the deals? Are they different from what they were?
For example, preach a pandemic? I think they are because they think
they're a little more realistic. I think in prepayment Demick when money
was free, there were transaction.
I mean, the whole spec market was, you know, we did a spec and chose not to
take it to the next level because when we did the spec, spec seemed like a very
interesting way to, in effect, monetize opportunity.
It very quickly became a highly speculative scenario, depended then
preposterous valuations that ultimately led to the crash of the whole spec
market. You know, world has changed a lot since
then and the and the change is basically modifying what you can do.
On the other hand, there's always demand for capital
and there's always that demand is always on the shoulders of those that have the
core. So so what's a specific investment after
his energy? You know, energy terribly well, as you
see opportunities, energy. Now, there's been a lot of tumult in the
marketplace because of Russia and Ukraine and all sorts of reasons.
Yeah. I mean, we continue to do something in
the energy space, not as much as I would have thought.
Only when this period began. The volatility in the energy space has
been so extreme. I mean, just think about it.
Within a 12 month period, the price of oil, you know, Vittorio vacillated
between 30 and 120. That's an incredible level of
volatility, makes making investments extraordinarily difficult and
challenging. Do you see a prospect of a little less
volatility because you have on the one plus OPEC's plus trying to limit things
that you get the US government, which if it does not try to regulate the price of
oil, looks kind of like it is because it says it's going to pull itself was going
to buy. So it looks like it's got a bid and ask
price. Yeah, but we also have a legend.
We also have an administration, it's very anti oil and that and in my
judgment that RTS provision is only going to hurt the United States.
I mean, we were producing 11 million barrels a day of oil.
I don't know what we're doing now, but I think it's down to three million barrels
a day. As we've cut back on capital for the
poor, for fracking, et cetera, not a healthy set of circumstances.
Now, the oil companies almost invariably say it's because the administration,
because of regulation and their move toward renewables, things like that.
So they don't want to make the investments.
The administration says, no, no. You could simply make the investments.
The problem is that your investors want it returned to them.
That is really a market fall phenomenon. It's not the government.
I'm sorry, I don't really I. I've heard that speech made by the
government, I don't believe that in this in the least.
I think, you know what? What we have is we have a eco friendly
government that doesn't understand that even if there is a future of non fossil
fuel future, the idea that it's going to happen in 15 years.
I mean, talk about sunk cost. I mean, just it just doesn't make any
sense. And so we're in effect creating a
shortage. By virtue of depleting oil depleting
capital into the fossil fuel area that creates inflation, that it just doesn't
make any sense. As I recall, you bought some distressed
assets in oil back in 2019. They're about right.
That turned out to be a good deal given how badly we need to know.
Probably 50 50 Anna Edwards. Again, it didn't do as well as we
expected because the volatility in that commodity was just beyond belief and we
know we'd ever seen that happen before. Your son nuclear.
I mean, a lot of people say we can't get to where we want to go without some
nuclear. Yeah, I I personally agree with that.
It's like cryptocurrency. It's it's one of those areas where I
don't understand it enough well enough to be able to invest in it.
But given the difficulties with fiat currencies you identified, I understand
you have bought some gold model. Yes.
First time in my life over the last few years, I've bought gold securities and
actually bought hard gold. Are you a buyer going forward?
I'm not sure. I bought it kind of as a hair, as my own
definition of a hedge. I haven't done well with it.
I haven't lost it. But.
But in a world where I think fiat currencies are being massacred or hurt,
I think in that kind of a world, more focus on some hard currency is relevant.
You're very much different. A lot of us bonds with real estate, as I
recall, you started that maybe when you were in law school at University of
Michigan, ISE with an undergraduate undergraduate year Michigan.
So it talked about real estate where we are right now.
We've got some record high rent prices. We've got mortgage rates going up.
Tell us your view on the real estate market right now.
For all practical purposes, I haven't bought anything in 10 years.
And where are the opportunities created? I've sold a lot.
I felt that the real estate market generally has been overpriced.
Particularly in the private sector, as opposed to think the public markets have
actually done a very good job of sensitizing people to what's going on in
real estate on the private side. I mean, we took over a public reach
seven years ago with that thing with 13 billion dollars of assets.
We bought nothing with that portfolio and sold one hundred and forty two out
of a hundred and forty five properties. What's really incredible is we sold one
hundred and forty two properties. And I don't have one sense of regret.
Not one of those deals do I see. Keith, I wish we hadn't done that or
waded into if anything which shows sold it faster earlier, quicker because it
was you know it was because of free money.
It created a price structure that that frankly was very decent, that
disadvantageous to the buyer.