John Coumarianos: I want to ask you about your sell discipline a little bit, the fund's turnover has been, since you've taken over a little bit over a 100%, I would say annualized.
Rob Gensler: Right.
Coumarianos: Well, is that just a function of the way valuations and prices have jumped around so much?
Gensler: Well, actually the turnover came down to about 75% to 80% in the last year, which surprised me honestly. I think my turnover is higher, because I think it's my fundamental training. I started at Salomon Brothers on a risk desk and I got trained that every day you come in, you look at every position you own and you say, "If didn't already own it, would I buy it today." Okay, it's a really harsh test. It's as if you are the new portfolio manager each day and you fire the old one that happen to be you, and you say, "You're either buying or hoping." It's an old trader's line.
Are you willing to buy it or you're just hoping it will go up. So it leads to a bit higher turnover, because I look at any name and I say, "Oh, my word, if didn't already own this, I wouldn't buy it." Well, maybe you sell it, but would I buy it in a smaller position size you sell in all.
I also have another thing that leads to a bit of turnover. I love a crowding-out effect. We own 65 names. I have owned between 60 and 70 for a long time now and it's likely to stay that way. And I like -- if I find a brand new name and I say, "Okay, so, jeez, but I have 2% cash and maybe I don't want to go to zero, so what do I sell, what do I shoot, so to speak."
So it leads to a bit of turnover that way too, because I really do think it's a best idea strategy, we're leveraging the platform and the firm, and we make mistakes. We make lots of mistakes and often it's not just what you do right, it's what you don't do wrong, and the biggest thing you can do wrong is keep your mistakes and have them become bigger mistakes.
Coumarianos: So everything almost a buy or sell for you, there is almost no hold?
Gensler: There's no hold. Our rating system internally has holds and I view all the holds as sells, because if analyst doesn't have a buy on it, you're not willing -- it's not a fresh money idea then what do you mean, what, my clients money isn't fresh? So sorry --
Coumarianos: Interesting. No, that's –
Gensler: It's real vicious. It's either a buy or a sell. You're either buying or hoping I mean in concept.