From Managing Portfolios to Running an Organization with Mike Freno

26:09obviously MassMutual insurer as the parent company is a big client. I'm assuming that's where the genesis of all these different asset management strategies came from. Who are your other clients? Yeah. So MassMutual makes up roughly half of our assets and that's for the general account. And then outside of that, we are predominantly an institutional manager at this time. We do have some penetration into the, we'll say, wealth and retail channel globally. Is that family office more like as opposed to mom and pop investors? It's through some RIA relationships we have. And then internationally, we go through wealth as well through some of the larger banks.

26:47But we're definitely more skewed towards what we would consider an institutional or intermediary type relationship. But it's going to make up the full spectrum of that. Obviously, insurance is a big component of what we do, just given our heritage and our DNA. That's a large component of our third party business. but also sovereign wealth funds, family offices, pensions, really across the spectrum in terms of where any institutional client, really globally. And that's one of the benefit we have. We do have client base that's split relatively easy amongst the three regions, I'll say, with the Americas, EMEA, and then Asia-Pacific in Australia.

27:24So I want to wrap my head around a large insurer like MassMutual as a client. I would imagine very long-term in perspective, but I don't really grasp what sort of risk tolerance an insurance company has. I assume they don't want you swinging for the fences. But on the other hand, hey, they could buy treasuries without you. What is that sort of risk embracing like? How does that settle out? What are they looking for in terms of returns? Yeah. And so I would say not many of our clients want to swing in for the fences. And usually we're not the ones to hire to do that. We are more very much focused on fundamental long term type and type investing.

28:09We do it all up and down and we do it within fixed income. We do it within real assets and we do it within what we call capital solutions. But, you know, insurance companies, and I will say this, Mass Mutual obviously is a mutual company. And you mentioned the long-term horizon, I think, is one of the best ownership structures we could have because they are owned by their policyholders who have a very, very long time horizon. At the current time, I think our oldest policyholder has owned a policy for 80 years. Wow. And that's a long-term horizon. That policyholder loves to see us pay dividends and then wants us to be there to pay the benefits to their descendants.

28:47So it's really taking a long-term horizon, which allows us not only when we make investments on behalf of our clients, but we make investments in the business, which is equally important for the longevity and sustainability of our company. We have a longer-term horizon. We're not necessarily worried about quarterly earnings or even annual earnings. We're fiduciaries of what we've been given, but we can take a long-term look. And in fact, our middle market direct lending business, we started building that in 2013, well ahead of a lot of the conversations that had, knowing we may be a little bit early in terms of the acceptance from LPs to move into middle market direct lending of the size and scale it is.

29:26But we took a view that long-term, we think this is going to be a valuable place to be. We also knew that MassMutual had an interest in the asset class, which helps us start new strategies. And so I think it's a good blend of that. And as we move further and further, insurance companies have been buying private or illiquid assets really forever. Forever, right. I mean, back in MassMutual, almost 175 years old. 175 years ago, there wasn't a lot of public bonds that were trading outside of government bonds. So they've been in this space for a long period of time, and now we're just somewhat showing it to other parties.

30:05So they're obviously skewed more towards higher rated assets, just given the rating of the company as a AA entity. But that being said, our business has other things further down the risk spectrum that allows us to grow and service other clients. I want to better define what capital solutions and real assets are. Let's start with real assets. So you mentioned music royalties and copyrights and things like long haul trucks. What other real assets do you guys own? And is the goal we're just looking for a steady low volatility income stream? In most of our strategies, it's that. And so I would say real assets for us is broadly defined as real estate and infrastructure.

30:51And even infrastructure and real estate can blur at some point in time when you start to look at logistics and things of that nature there. So when you say infrastructure, are we talking highways and bridges or are we talking trucks and rails? You think trucks and trucks, it's all of the above. For us, it's more along the trucks and rails and towers, wireless towers, things of that nature that fits within there. Data centers can fall into either one of those type things. So that's the real assets. But we do have the capabilities. Again, we own trailers. We own an aircraft leasing business. And so those things that are longer term, more stable type cash flows.

31:28Capital solutions really encompasses all of it, to be honest. It's more of a unique solution, a more bespoke solution for a client when it comes to it. It's not something that would, and certainly when we originate things in all of our private assets, there's some level of customization for those clients. But when you get into capital solutions, it's really a unique solution to a client who has a financing need of some side. It can be a preferred equity piece. It can be an equity or a debt piece with equity kickers, all sorts of things that fit within that that's slightly unique. And that will come more than likely with higher returns.

32:06It's a little heavier lift to be able to do, a little bit different analysis that goes along with it, but it's a higher returning profile. So I get the sense that there are some advantages to working with a large insurance firm, not just the longevity, but it seems like there is the freedom to do the sort of things that a lot of investors just don't have the patience to wait for. Yeah. And there's also an alignment. I mean, MassMutual is alongside our investors on almost everything we do. They're in the same strategies and varying sizes and scales. So there is a complete alignment from where we're investing our parent company's capital, as well as where we're investing our third-party event.

32:50But it does help to have a parent company like this who allows us to seed investments, allows us to grow things. And you've seen more and more frequently now the tie-ups of what we'll call alternative managers with insurance companies, because there is a need on the asset side, as well as the liability side. So the liabilities coming from the insurance company, those assets or those liabilities, the cash that comes with those needs to be invested in assets that provide a return that meet that liability. And so there's naturally this move. Now, we did this 20 years ago. And so we're seeing a lot of this happen now.

33:23But this is something that we had done a long, long time ago and seeing that a captive, which is what we started as an as captive asset manager for an insurance company can also be a great service provider to other clients as well. And that's really in 2000 when we started this focus of making what was Babson and the other brands more focused on third party as well as the parent company. And when you discuss liabilities for an insurance company, those future obligations are fairly predictable. I mean, there's some variability. Hey, you're working with annuity tables and things like that. But it's a pretty predictable set of obligations.

34:02How does that impact how you think about the risk tolerances and where you want to go with the investment dollars. Yeah. I mean, it's all, as with most fixed, all fixed income investing, candidly, it's, it is, you, you want to get your return, you get your coupon and then you get paid back at the end of the day. So it really is. And then how, how things are measured in terms of duration, long, in terms of tenor and all those things, really, that's something that we don't do as much. The parent company handles all the asset liability management side of things. They give us asset allocations. We go ahead and, and, invest those dollars.

34:36So we're the security selectors, if you will. But yeah, when you look at the liabilities of a number of insurance companies out there and you think of whether there's the life business, it could be term or it could be whole life. You also then look at the annuities, the pension risk transfer. All of those have a set, you know, pension risk transfer, a longer, much longer dated set of liabilities. But it creates an interesting opportunity in different asset classes to provide excess returns. And I think what folks are starting to see, and this is certainly the case with us, we have always recognized that we would be happy to pick up additional returns for an illiquidity premium without taking additional risk.

35:16And that's really what I think insurance companies have the flexibility to do, is to take that illiquidity premium because they have a much better idea of what their liabilities look like in matching those up. And you're a member of the executive leadership team at MassMutual. Discuss a little bit, if you will, what those conversations are like. It must be fascinating to sit on that board that's essentially overseeing your day job. Yeah, it was very insightful for me. I had some knowledge of the insurance industry and really just how it touched the asset management industry, But it does give me a bigger perspective on the industry as a whole.

35:56And I think more and more, as you see, and certainly there are really deep cases of this where alternative asset managers, whether it's with reinsurers or insurance companies, have become one. We have a front row seat to how the two are managed. And so I think it's just given us a much better perspective. And I also think it's made Barings and hopefully myself as a better partner to some of our other clients is recognizing and have a better understanding of that. Really, really interesting. I'm Joe Matthew, inviting you to join me for the Balance of Power podcast. Every day we deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including breaking news from Bloomberg's reporters and in-depth conversations with lawmakers and administration officials that you won't hear anywhere else.

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37:25Before we get into the details of investment management, I have to ask you a question. There was a quote of yours that kind of grabbed me. you've self-described your own leadership style as confident humility. Explain what that means. That's a fascinating phrase. Yeah, thank you for asking that. I use it a lot. I'm not sure where I picked it up, but I love it, and I think it describes how we operate at Barron's. It goes back to the element of having some self-awareness, and I think understanding we need to be confident in what we do. We make big decisions, whether we're on the investment team, making decisions for clients' portfolios, or whether we're in management or any other part of the business, we have to be confident in the decisions that we make.

38:07And we have to, you know, rebound from mistakes at times. But at the same time, recognizing with an element of humility, which I think is a gift for people to have, that we don't have all the answers all the time. And seeking counsel and seeking partnerships and seeking people to do that isn't necessarily a sign of not knowing things. It's a sign of just saying, hey, I need a little bit of help here. So I use the phrase very frequently. I love it. Again, whoever came up with it, I'll attribute it to him if I find out. But it is something I think and I hope I live by, and I think most of the teammates at Barings do as well.

38:43So let's talk a little bit about how the asset management industry is going to evolve over the next decade. You guys aren't very equity heavy, but you're much more focused on private markets, on anything that is a fairly regular income stream. How do you see not just insurance, but the entire asset management industry evolving in the future? Well, there's clearly a growth into what folks are calling private assets. I think that's definitely going to continue to be the trend. I also think in some of the more established private assets, there's a blurring of lines between public and private. And what was in leverage loan, the leverage loan market is a pretty good market for that.

39:25You've got deals that are several billion, which are going to private credit firms. You've got deals that were started in the middle market space, which would have been$500 million. Like I said, now they're several billion. And so is that a syndicated market or is that a private market? So you're seeing the ebbs and flows of that. And I think that makes sense. There's relative values that change between public and private markets over the time. But also more and more what you're seeing is kind of an emergence of more private asset classes being purchased by individuals and probably more by institutionals, less by individuals at this time.

40:02But over time, you'll see that it's in the asset-based finance space, the securitization space, and things that were always somewhat in the private space but didn't come out into the public markets through QSIP actually coming off a bank's balance. So I think that's going to continue. And you've seen any numbers of$3 trillion to$5 trillion of how big the market can be. Really, anything that's in a public market from a debt standpoint can really operate in the private market. And so it just depends on what borrowers are candidly looking for. Are they looking for some sort of certainty of execution?

40:37Can I get that better in the public market? Can I get it better in the private market? What terms can I get in each? Do I want my information in the public market? Perhaps I prefer to keep, I'm a closely held company, maybe I'd prefer to keep my information amongst a private and small group of lenders. So that's moving. You know, you see new things like portfolio finance, which is something we do on a large scale, which is slightly different from NAV lending, but it is lending to GPs and lending to portfolios. It's a growing business, highly customized, highly bespoke structures that take a lot of heavy lifting to do.

41:16But I think more and more we're going to see that as people try to find, and I described it earlier, possibly getting more higher yields, higher returns, but not taking more risk, but picking that up through either complexity premium or an illiquidity premium. So you mentioned a couple of things earlier that I want to hit back on, which is how various markets have kind of moved up. And I see this across lots of different things, whether it's public financing or even public companies, whether they stay private or go public. It seems that everything has gotten bigger, higher assets, higher AUM. And it almost feels as if Wall Street has kind of abandoned that middle market.

42:00You mentioned things that used to be private at$300,$400,$500 million are now still private at$234 billion. This seems to be going across every sector I look at. Is this just a natural evolution of capital markets? or have valuations and size just gotten so large that Wall Street can only service these giant shops and it creates this void in the middle underneath? Well, I think the ability for companies to stay private longer is a good thing, right? And I think it's actually, there's definitely a need for the public markets. We don't want to lose those all together and we don't want it to only be for the trillion dollar market cap companies.

42:42I think it's healthy to have a moving market because people at times will want some sort of monetization event. They will want some sort of liquidity. And you can get some of that in private markets, but it's not nearly the way you can get it in the public markets. But I go back to using the leveraged loan, and your example is exactly right. When I started out in the business, a broadly syndicated leveraged loan deal could have been$500 million. A bank would have brought that deal and 10 people would have owned it and traded it. Now, that's not the case. You've got to be moving up. So I think it is an evolution of things.

43:16And I think your banking regulations have changed some of the bank's ability to do some of this type of lending. We'll see if that changes in the future. But the good thing about the capital markets in general is it's efficient. And if there's a way for people to get excess returns, capital will flow into that. And over time, if spreads become compressed there, they'll move to other areas, which I think is overall healthy for a market. And you talked about the relative value as assets shift between public and private and back. How do you capture that gap, that difference? Is it just a function of all this capital flowing into private markets?

43:56There's no doubt public markets are historically pricey today, but it feels like so much cash chasing all these private assets, you're going to end up with a very similar situation. Yeah, I think one of the distinct differences is obviously the quickness or the rapidness at which a public market changes price. Whether it's valuation. Second by second. Whether it's valuation or whether it spreads on yields going wider or going tighter, that's effectively real time. It takes longer in the private markets because these deals take a long time to – longer to originate, to close, and to move on. And so the reaction time is slightly there.

44:40And if it's a brief correction in the market, maybe the private markets get it right and the public markets just had a period of inefficiency. But over time, those two should converge and you should be getting a premium if you're moving into private assets. There's nothing to suggest that you should be getting tighter spreads in a private market, giving up your liquidity. And there's some liquidity, but that's nearly the case of the public markets. If you're giving that up, you should be getting a premium. So over time, there needs to be a premium given into the private markets over the public markets, which would also suggest that over time, companies who are looking to, as much as possible, reduce their cost of capital will gravitate to where the financing is most appropriate to them.

45:22and that may be in the public, so it may be in the private. So Barings has been in the space for decades now. It seems that certainly since the financial crisis and more intensely since the pandemic, just huge flows of capital are going to private. At what point does that become a crowded trade? What's the capacity like on the private side? Yeah, it's big because in theory, you can start taking market share from the public side. And that's where I think some, you know, our direct lending business is really purely in the middle market space. And so think of us looking at companies with 75 million of EBITDA and below rather than the multi-billion.

46:05We don't currently traffic in that and we traffic in the middle market and then we traffic in the syndicated space. But the direct lending space in between is somewhat of a white space for us. But I think that's what you've seen is as large capital allocators and aggregators, have billions and tens of billions and 20s of billions to put to work, it becomes hard to do that in chunks of 250 million, much easier to do in 2.5 billion. And so there's a tug of war between the public and private markets as who's taking market share from that. All good companies, it's just what is your strategy necessarily looking to do?

46:43But without the private market seeing new deal volume. And so whether we start to see M &A transactions come back, whether we start to see club deals being formed for public companies and - Club deals being - Club deals will have to, club deals being you get four or five lenders together and they take down a$4 billion deal and say it's a club of us rather than one person doing it on a bilateral. Not quite a syndicate, not quite a single person. It's that great, it's that white space in between that evolves in there that you've got. And so there'll have to be either new deal volume, as I said, or the private markets will have to take market share, continue to take market share from the public markets.

47:19So we're talking about institutional investors. Do they want fewer but larger and more strategic relationships? What are they looking for in terms of capabilities and portfolio solutions from an investment shop like yours? Well, absolutely. And I think probably everyone is looking for fewer relationships. They have to deal with a lot of relationships and a lot of partners. So the more you can have a robust or a broad sense of capabilities, the more value you are to be. And I think what's interesting for, and what we've tried to build and how we've kind of gone through acquisitions and how we've gone through organic growth is to really make sure we cover all of that.

47:58And so we've, if you look at our acquisitions over time, if you look at what we've grown, we've tried to be global. And so we make acquisitions of things that are adjacent or tangential to our current strategies. Is that strategic or tactical? That's strategic. And that's just a view that we take. We want to have global capabilities for what we do. And so if we do direct lending in the U.S., we do direct lending in Europe, and we do direct lending in Asia-Pac. And it's basically saying to companies, if you have the desire for a global portfolio, if you have the desire for us to determine where the best relative value is, we can do that capability.

48:33You don't need to select three different managers to cover three different parts of the globe. equally we've done that with the liquid and illiquid side and so if folks come and say i want i want to leverage finance product i want something that's below investment grade but i know at times high yields more attractive at times leverage loans are attract more attractive and at times direct lending is more attractive you determine where that best relative value is and i think that's been a hallmark of how we viewed it let's do what we do well and let's make sure we do it globally and we have deep enough capabilities to service all those needs you've been on the investing side of global high yield.

49:08How has your perspective been affected as CEO from your background as a trader or investor in that space? Yeah. So one of the things that came out of it is I was a part of a U.S. loan group originally. So a syndicated loan group was where I first started at Babson. We then made the decision of, you know, these are similar two sides to the same coin. High yield bonds and leveraged loans are often in the same capital structure. One just comes with a fixed coupon. One just got a Q-SIP. One's more private, but often it's the same company. So we decided to combine those two businesses together. Then we went and said, you know what, what's unique about us is we've got great capabilities in Europe and we've got great capabilities in US.

49:48And so in 2009, we said, let's create a global high yield platform, which was really one of the first of its kind. And so that experience and perspective said to me, this is really something that's here. Clients will value our global perspective. They'll still may want to only allocate to one region or another or one asset or another, but who those are interested, let's take a look at that. And that, as much as the investing side of it was there, it was really the business side of it, I think, which has helped me in my current role. So I keep reading and hearing about new credit asset classes.

50:24What's the appetite like for that? Yeah, it's becoming more and more popular. I think it's really on the asset base side of things. So there's a lot of different things that can fall into that category. And you're talking about origination platforms, whether it's a mortgage origination platform, or someone will take all the mortgages originated by that and package it into something. So as more and more, it becomes more and more accepted to have a portion of your portfolio in illiquid assets. And I don't think it's just for insurance companies. I think insurance companies are well equipped to do that because their liabilities are fairly well known.

50:58But pensions also have a bucket for things that are illiquid. And I think historically they've used them for higher yielding things. But I suspect going forward and where a number of our conversations are taking place is around the IG portion of their portfolio, the investment grade portion of their portfolio. That if I can pick up an additional 100 to 150 basis points of spread or yield in a private market, I don't need all of my assets in my portfolio to be on the liquid side. That's usually the bucket I use for liquidity is on my investment grade and government bond side of things. But maybe I move a little bit into illiquid assets and pick up additional yield for that portion because I don't need 5 % I can sacrifice for illiquidity purposes.

51:43So it sounds like there are a ton of tailwinds for the private credit and debt sides. what do you think is the next phase of growth? What's the next area that's ripe that perhaps hasn't really been well explored? Yeah, we've canvassed a lot of it. I mean, I think there's a lot, but I do think the private investment grade side of the market is really going to be the area where it's going to grow. And when people talk about - Investment grade that's private, not public. Yes, and so I think when people originally, even as early as last year, when you have said direct lending or private credit, everyone would have moved to middle market corporate direct lending.

52:24And that's what was in everyone's mind. And that was a component of it. It's a component of it, but it's actually one of the smaller components of it, candidly. When you expand to all the other types of lending that can be done and has traditionally been done by banks and is now being done by asset managers and insurance companies, the opportunities are vast. And so I think that's going to be an area that continues to grow and continues to offer investors on the institutional side. And I suspect it will start to gravitate more and more towards the individual and wealth side of it, business as well.

52:58Really interesting. So you mentioned in passing some previous acquisitions, I know Altus and Griffon most recently. What are your plans? Are you thinking about more acquisitions? Is this deliberative or is it merely opportunistic or a little bit of both? It's really strategic. I think we have looked at and we love the portfolio capabilities that we have. We're willing to expand on those both organically and inorganically. We've had a history of building out teams. I referenced earlier we started building our middle market team in 2013. At that same time, we built our emerging market debt team at that time.

53:37But also, as you referenced, we've just made two acquisitions. Both happened to be in Australia, but they were extensions of capabilities we had. One was a real estate business, which gave us more of a global real estate presence. And the other was a securitizations business, which gave us global capabilities and securitizations. So hopefully you're seeing a theme here that we really want to continue to have the global. And so we are very much open and looking for acquisitions. As I mentioned before, we want to fully integrate those. And so this is a people business. And so when you're looking at specifically principally owned businesses, businesses that are owned by a founder, you've got to make sure your interests are aligned there and that there's an expectation that this is going to be an over time, an integrated company.

54:21Now, what we don't do is we don't mess with the investment process. That's what's got them there. What we do look to do is integrate operations, integrate sales to get a globe. We have a global sales force. We think it's best to leverage that way. But we're absolutely always looking for good opportunities and good things that hopefully will all fit within the strategic lens. So we're not going to be looking to buy something that doesn't fit with where we're going as a company, but certainly there are a lot of good companies out there, and we're looking at a few now and hopefully be able to have a few more to announce over the coming years.

54:53Really, really interesting. Let me throw you a curveball. All right. So you oversaw sales, operations, technology. You were on the investment side. Now you're CEO and chairman. How do you think about artificial intelligence affecting your business? What is the future of the sort of very personal relationships, very specific types of credit you guys swim in? How is AI going to impact that? It is going to impact, for sure. And so what we've created, we have an innovation team that really focuses on this because I think the use cases for AI and for all of these technologies is going to come throughout every one of our teammates.

55:37It's not necessarily going to be me sitting at the top of the organization saying this is how we should use it. The applications are yet to be determined exactly how the art of the possible is here. I think one of the things we're finding is the data, especially in the private markets, has become so, so important. And right now, a lot of it is unstructured data from historical. And everyone's doing a better job of cataloging that data today. But the ability to use these machines to make decisions really depends on the access to data. And our data on private companies and others' data on private companies is very, very valuable to help inform investment decisions.

56:19and inform business decisions. But if it's not in a structure that works, it's not in a structure that can be accessible, it's of no value. Not machine ready quite yet. Look, the technology is getting better to go out and find unstructured data and bring it in, but it's still a ways away. The public markets have done an incredible job of bringing things together and having it to be able to mine that information. But really, the private data that exist out there is so large and it's in many cases certainly the historical data is very unstructured. Really interesting. So let's jump to our favorite questions that we ask all of our guests starting with what's keeping you entertained these days?

57:01What are you watching or listening to? Yeah in terms of streaming I'm you know I've just finished or almost finished with season two of Silo. Oh really? Yeah it's an interesting one. Sci-fi that's on Apple if I remember. It is sci-fi It's on Apple. It's entertainment for sure. I watched Three Body Problem a while ago as well. So good. Yes. So good. I'm waiting and anxious for the second and third season of that to come up. So I get my fiction when I watch, and I mostly read nonfiction. I'm just at the end. Well, we'll talk a little bit about books in a moment. Before we get there, I want to ask, who were your mentors who helped shape your career?

57:39Yeah. So I've used these two, and these two are really pivotal. One was my second boss at PricewaterhouseCoopers. What he taught me was really the caring nature of business and how people should view others and treat others. And it was an interesting – I worked for him for only two years. And ever since I've left, I still get a call on my birthday. Without fail, I talk to him other times, but without fail, I get a call on my birthday. And that's always resonated. I mean, working for someone for two years, but then for decades afterwards, they continue to remember something that is, you know, it's birthdays become come and go every year.

58:17But it was important enough or I was important enough to him as a person to make that to make that call. So that's something I've tried to take away and be conscious of that people care about those things. Talk about people skills and people business. It was an admirable trait, certainly. And then another one was a coach of youth sports, was really one who taught me that the individual will never be above the team. And no matter how valuable someone is, no matter how important capabilities or skill set are, if they don't fit within the strategy of a team or the approach and philosophy of a team, it won't matter.

58:53It will be destructive. And so learning those on really, again, and I think my skill set and my personality fits well within a team-based structure, which is to your earlier question about how, why did I stay at or how have I stayed at Barings for so long? It was a fit. And so recognizing that always made me understand. And again, I think it pointed out to having some self-awareness that these companies and part of my job as a steward of the company right now. But MassMutual, as I mentioned, has been around for 175 years. as long as it owns Barings. It's going to be around many, many years after I'm gone, and I'm a steward of it currently.

59:27But my job is to bring other people along, and so therefore it has to be a team. Let's talk about books. What are some of your favorites? What are you reading right now? Yeah, I'm just finishing up the Steve Jobs book by Walter Isaacson. He's fantastic. Before that, I read the Musk book, and then I actually read a book by him called Code Breakers, which was about the mRNA technology. so I get most I read mostly non-fiction when it when it comes to that so I'm going through those kind of juggle books at the same time I just also finished 1776 by David McCullough so that's that's really what I'm reading but most of the stuff is non-fiction I every time someone brings up McCullough I have to bring up the Wright Brothers book by him amazing yeah never okay well that'll we'll put that on the list I haven't read it yet but I'll put that on the list And a good writer is so gifted.

1:00:17I mean, it's amazing what they can do with stories. So I've enjoyed reading those. Our final two questions. What sort of advice would you give to a recent college grad interested in a career in either private investing, insurance investing, or in general, if that was what they were interested in as a career? Yeah. I mean, first, it's a great industry. I love it. And there's a lot of aspects of financial services. And this is somewhat timely. I've got a sophomore in college now who I'm somewhat counseling on, although he listens less to me and more to other people. But I've always advised when we bring in two-year analysts out of college, we have a two-year analyst program when I'm fortunate enough to speak with them.

1:00:59It's take it all in. You don't know exactly what you want to do today, but look around, ask a lot of questions. Intellectual curiosity is key. If you've got intellectual curiosity about something, you'll be better at it. But most importantly, find a place where you want to be working with who you want to work with doing what you want to do. And that to me is the key. If you find yourself in any of those three don't match up, I really think it's irrespective of how great you think the industry is, the prestige of it. You just won't be happy long term. And I think I was, again, fortunate. I loved public accounting, but I couldn't see myself doing that forever.

1:01:38I enjoyed it. And I was fortunate, again, to find myself in a situation like this. So if you're not where you are with who you want to be with doing what you want, it'd be time to move on. And our final question, what do you know about the world of finance, credit, lending, and investing today? You wish you knew 25 years or so ago when you were really first getting started. Yeah, I think what I would say is what I knew back then or thought I knew back then, that fundamentals ultimately are key, you lose track of that sometimes when you see euphoria and you see bubbles and you start to get away from really long-term cash flows of things or what really matters over time.

1:02:21So I think it's not what I wish I knew then. It was what I wish I hadn't forgotten over time because mistakes are made really when you lose sight of the fundamentals of things. And so I would encourage folks that long-term valuation should be based off an expectation of growth, an expectation that that sooner or later will turn into earnings, which will ultimately turn into cash flows. And keeping that in mind that that's the fundamental for all investments and what investments that are peeper are made and ultimately valuations. Really, really very fascinating. Mike Freno, thank you for being so generous with your time.

1:02:56We have been speaking with Mike Freno, chairman and CEO of Bearings, which manages over$430 billion in global financial assets. If you enjoy this conversation, check out any of the 500 previous interviews we've done over the past 10 years. You can find those at Bloomberg, iTunes, Spotify, YouTube, wherever you find your favorite podcasts. And be sure and check out my new book, How Not to Invest, The Ideas, Numbers, and Behaviors That Destroy Wealth and How to Avoid them coming March 18th, 2025. I would be remiss if I did not thank the crack team that helps put these conversations together. Anna Luke is my producer.

1:03:42John Wasserman is my audio engineer. Sean Russo is my researcher. Sage Bauman is the head of podcasts here at Bloomberg. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

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