Latest / Bloomberg Intelligence / Merlin's Obuchowski on AAPL: Not Impressed With Tim Cook(Audio)

Transcript

Merlin's Obuchowski on AAPL: Not Impressed With Tim Cook(Audio) · Bloomberg Intelligence

• 0:03
  Speaker 1: Global business news twenty four hours a day at Bloomberg
• 0:06
  Speaker 1: dot com, the radio, plus Globile lap and on your radio.
• 0:09
  Speaker 1: This is a Bloomberg Business Flag BOM Bloomberg World Handquarters.
• 0:13
  Speaker 1: I'm Charlie Pellett, SMP five hundred Index on track for
• 0:17
  Speaker 1: a losing day, in fact, heading towards the longest weekly
• 0:20
  Speaker 1: losing streak in four months amid lackluster results from large retailers,
• 0:24
  Speaker 1: a topic we were just discussing nords from shares. They
• 0:28
  Speaker 1: are now down by fourteen point three percent. The SMP
• 0:31
  Speaker 1: downs seventeen of the cline of eight tenths of one
• 0:33
  Speaker 1: percent down industrials close to the worst level of the day,
• 0:37
  Speaker 1: down one d eighty one points. The drop there of
• 0:39
  Speaker 1: one percent and has stack down nineteen a drop of
• 0:42
  Speaker 1: point four percent. Gold up three dollars, the ounce to
• 0:45
  Speaker 1: twelve seventy four, a gain of two tenths of one percent.
• 0:48
  Speaker 1: Your tenure of fourteen thirty seconds, the yield there one
• 0:51
  Speaker 1: point seven oh percent. I'm Charlie Pellett, and that's a
• 0:55
  Speaker 1: Bloomberg Business Flash. Charlie Pellett, thanks so very much. Don't
• 1:00
  Speaker 1: know but the E E t F Report brought to you
• 1:01
  Speaker 1: by Van ECK vectors e t F s expect more
• 1:05
  Speaker 1: from your muni's target tax exempt income by maturity and
• 1:08
  Speaker 1: credit quality, all with low cost e t s. Visit
• 1:12
  Speaker 1: vaneck dot com slash Muni Vanek access the opportunities for this.
• 1:17
  Speaker 1: Now we turn to Bloomberg's Confine Cotterie Smart Beta has
• 1:21
  Speaker 1: come to the fixed income e t F market. Index
• 1:24
  Speaker 1: i Q has introduced to e t S based on
• 1:26
  Speaker 1: a momentum investing approach to fixed income markets to really
• 1:30
  Speaker 1: take some pain out of investors portfolios and let some
• 1:34
  Speaker 1: sleep at night not having to retilt their portfolios every
• 1:37
  Speaker 1: time the Fed makes a move or a dozen. That's
• 1:40
  Speaker 1: Adam Patty, index i q's chief executive. Patty explains the
• 1:44
  Speaker 1: strategy behind the i Q Enhanced Core Bond U S
• 1:47
  Speaker 1: e TS. We take the investable M bond segments, whether
• 1:51
  Speaker 1: it's governments, corporates, and the mortgage backs in the Enhanced
• 1:55
  Speaker 1: and we use a momentum factor to tilt between those
• 1:59
  Speaker 1: different asset classes to allow investors really to get more
• 2:03
  Speaker 1: from their core investment. Patty says their second new e
• 2:06
  Speaker 1: t F, the i Q Enhanced Core Plus Bond U
• 2:09
  Speaker 1: S a t F as U S higled debt in
• 2:12
  Speaker 1: the mix along with a dollar denominated debt of emerging
• 2:15
  Speaker 1: market issuers. Both e t F s have an expense
• 2:18
  Speaker 1: ratio of thirty four basis points. They trade under the
• 2:21
  Speaker 1: symbols A G G E and A G G P.
• 2:25
  Speaker 1: That's your Bloomberg ETF report. I'm Catherine Cowderie. All Right,
• 2:44
  Speaker 1: the sun it's going down just a little bit here
• 2:47
  Speaker 1: in Bermuda. We are broadcasting live from Elbow Beach, Bermuda,
• 2:51
  Speaker 1: an ocean front Enclavo classic style and contemporary luxury. Our
• 2:55
  Speaker 1: next guest is very jealous that we are near the
• 2:58
  Speaker 1: water because Michael Obohofsky, the founder of Merlin Asset Management
• 3:04
  Speaker 1: based in Boston. He's a competitive sailor in addition to
• 3:08
  Speaker 1: the fact that he probably has a good good qualification
• 3:12
  Speaker 1: for understanding the psychology of investors, because dr Obohovsky knows
• 3:18
  Speaker 1: a lot about psychiatry. He was going to be a
• 3:21
  Speaker 1: doctor at one point, and he earned his PhD in
• 3:23
  Speaker 1: clinical psychology from the New School for Social Research. Michael Okhovski,
• 3:29
  Speaker 1: thanks for being with us. Great to be with your
• 3:33
  Speaker 1: Did I capture all of that that I that I
• 3:35
  Speaker 1: was able to put enough forward for you? To be
• 3:38
  Speaker 1: a little bit sort of jealous about our proximity to
• 3:41
  Speaker 1: the water. Well, it's it's very generous description of my background,
• 3:46
  Speaker 1: but I am definitely jealous of you, of you being
• 3:48
  Speaker 1: in Bermuer now, although I am I am actually in Newport,
• 3:51
  Speaker 1: Rhode Island, so very close to the water. Also, oh
• 3:55
  Speaker 1: all right, well then it's been very good. All right,
• 3:57
  Speaker 1: So success follows success. Um, it's how how can people
• 4:00
  Speaker 1: be successful using this Merlin large cap growth strategy in
• 4:05
  Speaker 1: order to perhaps eventually enjoy all of these good things? Well,
• 4:10
  Speaker 1: I think I think what it helps. It helps to
• 4:12
  Speaker 1: focus on the fundamental characteristics of the companies, and also
• 4:16
  Speaker 1: it helps to cut through through the incredible noise that
• 4:19
  Speaker 1: we have been experienced in the markets. I think, you know,
• 4:22
  Speaker 1: this is the end of the week where many of
• 4:25
  Speaker 1: the large retailers we reported pretty pretty horrific numbers, and
• 4:31
  Speaker 1: and I think everybody is questioning whether the consumers are dead,
• 4:34
  Speaker 1: whether retailers are dead. I think the consumers do not
• 4:38
  Speaker 1: appear to be dead. They are still spending, but they
• 4:40
  Speaker 1: are spending differently, which might very well bring bring very
• 4:45
  Speaker 1: unwelcome news to retailers, malls and sort of related businesses.
• 4:50
  Speaker 1: The the world is changing and you have to be
• 4:53
  Speaker 1: on your touse. You have to pay attention to what
• 4:55
  Speaker 1: you're investing in, and it's um and as I mentioned,
• 4:59
  Speaker 1: it is very difficult to keep focused on fundamentals, good
• 5:02
  Speaker 1: characteristics of companies that are still out there, that are
• 5:05
  Speaker 1: growing at the at the good pace and building their
• 5:10
  Speaker 1: businesses despite the slow economy. Well, your strategy very in
• 5:16
  Speaker 1: a very basic sense, is you select in one of
• 5:20
  Speaker 1: your funds the fifty most attractive large cat growth firms,
• 5:23
  Speaker 1: regardless of industry or sector. Uh, you've got a three
• 5:26
  Speaker 1: to five year outlook, use a comprehensive multi variant approach,
• 5:30
  Speaker 1: bottom up, topdown, contivacative evaluation, et cetera. Up Right, now,
• 5:35
  Speaker 1: do you have any big retailers in any of your
• 5:39
  Speaker 1: various funds or did you say handwrittings on the wall
• 5:42
  Speaker 1: department store chiefs are becoming dinosaurs, Kathy, It's a great question.
• 5:49
  Speaker 1: Retail retail business has been very, very tough, and I
• 5:53
  Speaker 1: see the primary reason for the retail business being being
• 5:56
  Speaker 1: difficult as Amazon. That Amazon is really just stealing their business.
• 6:01
  Speaker 1: And when you think about it, it's only represents about
• 6:04
  Speaker 1: Amazon only represents about seven percent of the of the
• 6:08
  Speaker 1: retail business right now, and it's already destroying companies like
• 6:11
  Speaker 1: we're like we have heard reporting this week. However, it
• 6:16
  Speaker 1: is possible to find the good retailers, but what I
• 6:20
  Speaker 1: would call them those are the retailers that haven't been
• 6:24
  Speaker 1: Amazon yet are very difficult for Amazon to to capture,
• 6:28
  Speaker 1: so I so I own some of them. They are
• 6:30
  Speaker 1: the example is Michael Stores uh and other examples are
• 6:34
  Speaker 1: are those um off price retailers like for example T
• 6:39
  Speaker 1: TJ Max, which I also owned for my clients. And
• 6:42
  Speaker 1: also the the building business. The home building has been
• 6:47
  Speaker 1: doing well, so I own laws and also on HDS
• 6:53
  Speaker 1: which is a spinoff from Home Home Depot that is
• 6:56
  Speaker 1: focused on on professionals, so they It is possible to
• 7:00
  Speaker 1: look look into retail and actually find good companies, but
• 7:03
  Speaker 1: it has been very, very difficult and really eliminates the
• 7:06
  Speaker 1: majority of the sort of traditional retail eage. Michael, what
• 7:12
  Speaker 1: kind of time horizon do you recommend that investors take
• 7:15
  Speaker 1: when they deploy this kind of strategy. Well, I look
• 7:20
  Speaker 1: at the companies when I choose them for the portfolios,
• 7:22
  Speaker 1: I look at about three to five years, so it's
• 7:24
  Speaker 1: you know, five years, it's probably questionable whether you can
• 7:27
  Speaker 1: really do it at such such period of time. But
• 7:31
  Speaker 1: I think one to three years, and one year is
• 7:34
  Speaker 1: probably two little, so I would say three years. It's
• 7:37
  Speaker 1: sort of the average what you should be looking at.
• 7:40
  Speaker 1: And uh, it's a on. All my strategies are fairly
• 7:44
  Speaker 1: low turnover strategies. The annualized turnover is about so once
• 7:49
  Speaker 1: they select the stuff, they tend to stay in the
• 7:51
  Speaker 1: portfolios for a fairly long period of time. How you
• 7:55
  Speaker 1: how you look at the come neat Apple? Now? You know,
• 7:57
  Speaker 1: in some sense you get so big, you get sure.
• 8:00
  Speaker 1: They had the big deal, right that a billion dollar investment,
• 8:02
  Speaker 1: indeed the largest It's like the Uber of China. Right, Um,
• 8:06
  Speaker 1: this deal led by Tim Cook really an interesting story.
• 8:09
  Speaker 1: But I remember Microsoft was just nobody like Microsoft? Right Microsoft?
• 8:12
  Speaker 1: See old and stodgy things. You're change to Microsoft. A
• 8:15
  Speaker 1: lot of people like that stock. Now, how do you
• 8:17
  Speaker 1: feel about companies like that and this this big mature
• 8:20
  Speaker 1: text space. Well, I have to tell you the the
• 8:24
  Speaker 1: A few years ago I was talking to San Francisco
• 8:26
  Speaker 1: to some of the scene at people about liking Microsoft,
• 8:30
  Speaker 1: and they were looking at me like I had a
• 8:31
  Speaker 1: third eye in the middle of my forehead and I
• 8:35
  Speaker 1: could see at that time, I could see changes happening
• 8:37
  Speaker 1: to Microsoft, and it took a few years for for
• 8:41
  Speaker 1: numbers to sort of show what they've been doing. So
• 8:45
  Speaker 1: it's um it's an interesting question. They are they are.
• 8:48
  Speaker 1: There's a benefit to large technology companies benefit or experience
• 8:52
  Speaker 1: and what they are able to do, but they have
• 8:54
  Speaker 1: to be able to change, and we have been seeing
• 8:57
  Speaker 1: some of those those old style tech companies changing. Microsoft
• 9:01
  Speaker 1: as a perfect example. Cisco is another example of a
• 9:04
  Speaker 1: company that is completely reinventing itself. Oracle might be another
• 9:08
  Speaker 1: one moving into the cloud. Apple Apple has been a
• 9:12
  Speaker 1: really frustrating company. I think a few years ago there
• 9:16
  Speaker 1: was a question, well was Apple really all about Steve?
• 9:19
  Speaker 1: And they had a deep bench, there were a lot
• 9:22
  Speaker 1: of people working with Steve, and at least so far,
• 9:27
  Speaker 1: I have to say that the answer is that it
• 9:29
  Speaker 1: was really all Steve. I have not been impressed with
• 9:32
  Speaker 1: Tim Cook. I've always said that he was a very
• 9:34
  Speaker 1: good CEO, but I don't see him as a good
• 9:37
  Speaker 1: leader of the company. I think the design is also lacking.
• 9:42
  Speaker 1: They haven't developed anything beyond what was Steep set them
• 9:45
  Speaker 1: to do. So it's a company that has still great potential.
• 9:49
  Speaker 1: I think they have. They just up there are and
• 9:52
  Speaker 1: the budget to about ten billion dollars or something better
• 9:55
  Speaker 1: come out of it. But right now was driven by
• 9:59
  Speaker 1: single product Keeno. More than six of our avenues are
• 10:02
  Speaker 1: based on an iPhone, and there was nothing else and
• 10:04
  Speaker 1: there's still nothing else on the horizon. At the same time,
• 10:08
  Speaker 1: Apple generates more cash than most of the technology companies combined,
• 10:13
  Speaker 1: so they it is very inexpensive. They are questions about
• 10:17
  Speaker 1: the growth. The company is still well well managed, isn't
• 10:21
  Speaker 1: going to return to growth? Those are the questions that
• 10:25
  Speaker 1: I'm struggling with. And I still own Apple, but I
• 10:29
  Speaker 1: would call it I still own Apple, rather than I
• 10:32
  Speaker 1: believe that I will own Apple for a long period
• 10:34
  Speaker 1: to come. Fascinating. Thank you so much for joining us.
• 10:39
  Speaker 1: And next time we come to Berne to maybe you'll
• 10:41
  Speaker 1: get your sailboat and race down. Okay, you're very much
• 10:45
  Speaker 1: great talking to Kathy and Fim. That's Dr Michael Obohovsky.
• 10:50
  Speaker 1: He's a founder Merlin Asset Management based in Boston. On
• 10:53
  Speaker 1: you heard him. He's the Newport Rhode Island. Today. A
• 10:55
  Speaker 1: lot of people on this Friday afternoon are on the
• 10:57
  Speaker 1: beach on anybody else is on quite a night speech
• 10:59
  Speaker 1: as uspn Elbow Beach Elbows Elo Beach Resort, I'm calfing
• 11:02
  Speaker 1: haze along with pin Fox ticking stock on Bloomberg Radio