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The transcript from this week’s, MiB: Fidelity Contrafund’s Will Danoff, is below.

You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.

 

 

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Transcript

This is Masters in business with Barry Ritholtz on Bloomberg Radio.

Barry Ritholtz: This week on the podcast I have such an extra special guest. His name is will danoff. He runs fidelity’s contrafund, it’s the largest single manager fund with about 130 billion dollars.

And the track record of the fund is just outstanding. He has crushed all the competition over 30 years. He’s beat large cap growth by 400 basis points. He’s beat the S&P 503 hundred basis points. Not only has he outperformed on an annual basis if you put money into his fund versus the S&P 500 in 1990 when he started.

His fund is now worth 2 1/2 times more than the index is. This is really a master class on how to think about active management. What you need to do to engage in stock picking, why it’s so difficult and why you need a powerful team of experts around you.

To help you with this, he has worked with all of the greats at Fidelity and explains why Fidelity is such a key aspect of this. I could Babble about the conversation forever rather than do that, let me just stop and say with no further ado, my conversation with the Fidelity Contrafund’s Will Danoff.

My extra special guest this week is Will Danoff. He has been running Fidelity’s Contrafund for just about 30 years. The fund is the largest actively managed mutual fund.

Run by one person, it’s about 130 billion dollars an since September 1990 when he took over the funds, he has outperformed the benchmark S&P Index by more than 300 basis points annually. Will denoff.

Welcome to Bloomberg. Thanks Barry. It’s great to be with you so that track record is really quite astonishing. You’ve returned an average 13% compounded annually. Your benchmark. the S&P 500 is 10%. The average large cap growth fund has returned about 9%.

So Will what is the secret of your success?

Will Danoff: Yeah, very, I think you know sometimes you lose track of the percentages, but I think if you had invested $10,000 in the S&P 500 and you should have your fact checkers figure this out. But I think that after 30 years of being up whatever it is 10% a year.

You’re at like 200,000, and if you were invested in Contrafund, you’d be closer to like 480,000, so it really can make a difference. Com pounding is an important concept for your listeners when it comes to investing, and to the extent you can find a fondor.

A company that can compound overtime. It really does make a difference over the decades, but I’d say Barry for for me the North Star has been the importance of analyzing companies keeping an open mind working really hard an stay inflexible.

Having a great team and then maybe just bringing it all back to the earnings per share of the underlying companies and trying to think about you know what the company could earn looking out five 7 years you know, will this company be bigger and better?

So I do believe that the growth discipline is a superior discipline, and then you know, once you’ve determined what you think the company might earn looking out to the extent you can look out and you have to be honest and say, you know, I.

I really am not sure you know in the in the world of Technology you have to be really careful about extrapolating growth rates, but then ideally you’re trying to pay the the best price you can for you know us well positioned growth company with you know a good brand and great management and strong cash flow and stuff like that.

But I’d say you know, cast a wide net, be flexible, and then you know continue to monitor what your your investments are doing and what your management’s are doing.

I’m much more of a advocate of the, you know, sort of the poker game approach. I think it’s hard to say. You know XYZ is gonna be a buy and hold for 10 years, but you know, and this is the greatest thing since sliced bread, and therefore we’re all in. Some investors can do that, I think over.

30 years you make a lot of mistakes. You accept your mistakes. You learn from your mistakes but.

One idea I have is just to say listen. I think you know you’re, you know we’re playing poker. I have an ace you’re showing A3. I think this is starting out to be a good hand for me, so I’m going to bet some and start to build a position and then if I’m.

Served another ace, meaning the company you know says it’s going to expand into California or expand in India. Or you know, introduce the new product and the results. Show that those efforts are going really well.

Then you bet more so again, for me it’s a little more incremental and a little less ahah. The light bulb went off, you know plastics are, you know we’re all in on plastic plastics without data, so I would say you know, let’s start with the facts.

You know, Fidelity is just an unbelievable place to manage money. We’ve got an unbelievable research team. We have, you know, experts in virtually every industry that matters. We have experts in virtually every region of the world that matters. We have experts in you know all.

Disciplines in the market value growth small mid large. All parts of the cap table, you know investment grade high yields convertibles and so you know Fidelity. Sort of the big City Hospital Barry and you know for your listeners you know, do you want to have the brain surgery and you know a small?

Regional Hospital in the middle of nowhere, probably not, but if you go to.

A Big City Hospital where they’re doing large numbers of these procedures. You’re probably gonna feel better. You know everybody makes mistakes, but we see more companies we attend. More meetings. We interview more management teams and through that process, hopefully.

We’re going to be able to identify changes that are important in different industries.

An also just identify what we consider truly world class management teams that are doing things a little better and you know you try to keep track and you do your best and you know I I’ve just survived. Frankly in a very competitive industry Barry, but you know the Fidelity Hall of Fame managers. I mean, Joel Tillinghast, who’s

Managing the low price stock fund have done phenomenally well. Steve Wymer, who runs our growth fund, is done phenomenally well. We’ve got a whole cast of other folks in our starting lineup who are doing exceptionally well. And then of course, you know the long history with going back to you, know George Vanderheiden, Peter Winch, Bruce Johnstone.

But even before that, you know. Net Johnson Jerry’s I.

So. The idea of doing bottoms up. Fundamental company analysis is not going away. You mentioned the index Barry, and you know the index is very hard to beat. Let’s understand that there is survivor bias in the index to better companies like Microsoft and Google and Amazon.

Grow and become a larger part of the index and the weaker companies you know. Slow down and don’t grow and and therefore don’t appreciate in value and therefore are a smaller part of the index. So the index is hard to beat. And I agree with Warren Buffett that you know the S&P 500 or even the Dow now is.

Is not the the Dow or the S&P of 75 or 80 years ago? You know, it’s it’s a much more cash generative. Much more growth oriented. You know globalization has been very positive for you know corporate profits, and I think very positive for society in the world. But we can get into that later. So I.

You know, I’d say work really hard. Know yourself, know your companies you know. Continue to monitor your companies. Try to upgrade on Weekness and you know try to be patient. In long term you know you mentioned earlier that sort of so much noise now in the market and.

People worried about every tick, you know, I. I think if you step back and say What do I own? You know, you know, can I imagine you know, just look around you and say, Gosh, you know.

My kids can’t live without their smartphones than they they were. They love their smartphones, you know. And in in Fidelities case, we’re able to talk to Luca Maestri, who’s the CFO of Apple and.

You know he shared with us recently that in the Americas, Apple’s customer satisfaction with the iPhone is 98%, and you know, it’s like, Oh my God, that’s unbelievable. And then you step back and say, well, gosh, you know?

10 years ago no one had, you know iPhones. Everyone had blackberries, and now you know I have two smartphones. I have a MacBook Air. I have an iPad and I’ve got ear pods, you know, and it’s I’m really happy they all work and you know, so you’ve gotta be aware of what’s happening in the world and.

I think that’s often where some Wall Street folks, particularly about the value discipline. Can you know, get a little confused. It’s like you know, the classic value trap. It’s a really, you know, cheap stock, but.

It’s not going anywhere.

Ritholtz: And it’s not gonna get cheaper, right?

Danoff: You know it’s a capital intensive cyclical business and you’ve got to make sure your assumptions are appropriately conservative.

Ritholtz: So let’s stay with with talking about Fidelity a little bit. You mentioned some of the the murderers row, the 28 Yankees lineup you guys have.

You started at Fidelity in 1986, but if my research is correct, it wasn’t as a fund manager, right? You came in as an analyst.

Danoff: Yes, very an interesting footnote for your listeners. I applied for a summer job in 1985 and I was rejected so very one must always persevere and you know, I think the decision was probably the right one. I was a bit immature and not as experienced, but.

Luckily I was accepted in for the full time job as an analyst in 1986 and I think it’s important when you think about companies as investments as employers is to understand the culture of the company an you know I’m so grateful and lucky that.

Fidelity was and still is a research oriented, you know, active manager and everyone. You know that I mentioned earlier. All the great fund managers all started as analysts at Fidelity, you know, oh

Ritholtz: Really, does that include Peter Lynch? He started as an analyst.

Danoff Oh yes.

Yes yes yes yes. Peter started as an analyst. George was an analyst. Bruce. Of course everyone came up from the ranks. Ned was an analyst Abby Johnson who is the current CEO with an analyst and then a fund manager. So when you have that common experience in common language, it’s just so helpful.

Ritholtz: So you had Vinick between you and Lynch, right?

Danoff: So yeah, one.

Jeff Vinik, of course, you know an unbelievably talented. Analyst and fund manager and investor started. My year, but he started in the spring because he had taken a job in New York and then decided he.

Wanted to work for Fidelity so he started in the spring, but there were about seven of us, including Joel Tillinghast, who started a little later that year. And frankly, Barry, I was probably below average for my class. We, you know, we had a very strong class, but I was lucky that.

I was assigned the retail stocks. And the retail stocks were it was a large group of stores. You know, consumer spending is something like 2/3 of the US economy and they had all sorts of different stocks. You know, Kmart and Sears were stodgy potential turnarounds and then you have the.

Membership warehouse clubs were sort of the new shiny concept that you had to really think hard about. You know what’s this industry going to look like? And then the Department stores were sort of slower growers, but generating free cash flow and, you know the Walmart was the thoroughbred and you know that.

It was really fun and and great, and it was relatively understandable, so I think I was exposed to many different types of stocks, an management salwar people, sort of people, people, so you didn’t have to try to understand technology or science, it was just, you know, going into a store with a.

CEO or CFO. And you know, seeing how they interacted with the customer and looking at the prices. And you know, do is this store appealing so anyway? But you know the beauty of Fidelity is we’re all in the trenches together, and you know, Peter and George and Bruce were in these meetings with me and.

Many others and you know it was. A really great sort of apprenticeship to watch. You know, these great investors analyze different companies and understand you know the idea of unit growth if I think.

When I first met Bernie Marcus, the founder of the Home Depot, I think he might have had like 40 stores, and now they have 2000. But you know the.

The thought was if it’s working in Atlanta, GA, it can work in Florida and I remember when they first opened their stores and they acquired some stores to expand in Texas which didn’t workout as well. But when they first opened the stores in California you know? I mean, it was literally. There was another concept across the street and you know the Home Depot.

Parking lot was near full and the other store was sort of going into a Bowling Alley. You know it was virtually empty, so you know part of it is being practical. You know, sort of what is actually happening. As I said earlier, Barry earnings per share becomes sort of the the North star for a growth investor and.

You know, if Home Depot is opening 15% new stores a year and their old stores were generating, let’s say you know 5 or 10% growth and the margins were going up and the ROI on the new stores was high, you know you start projecting out, you know 30% growth and whatever that works out to. But you know doubling of earnings in three years.

Danoff

With.

You know the potential for many, many more stores, so that was a great insight for Maine that help Maine, you know. And again, I yeah over 30 years I all I can tell you is that I was there and I should have, you know, the the one of the great lessons learned Barry is I should have bought more of these great growth stocks like the Home Depot.

Or, you know, I was there when Howard Schultz went public in 1994. I mean, you can’t. You can’t. Everything was 9492, but again, I was a young fund manager.

But picture this, you know, Schultz had 100 and I think 140 cafes when he opened up. They were all in Seattle and Portland. I remember someone sitting next to me on the road show lunch saying, yeah, you know it might work in the Pacific Northwest, but you know their treehuggers there and they like.

You know to sit around in a coffee shop, but it’s not gonna work in New York or it’s not gonna work in San Francisco. But the data showed, you know, I believe Orin Smith, who was a CFO at the time, said they had opened a couple of stores in San Fran and they were all exceeding their expectations. And, you know, the ROI’s and the new units were through the roof.

I think the arithmetic was because they were least units. It cost $250,000 to open a Starbucks way back when the stores were doing 650,000 of revenue and like year two and a 20%.

EVA dog or cash on cash unit volume. So they were, you know, for 250,000 you were getting 100 and $25,000 of cash in like a year or two, which meant you could finance rapid growth and it was working and you know the comp store sales. You know the Comp Cafe snails were double digit for the last three years, it was the perfect story.

So here’s the lesson to your listeners. Barry. The stock pops on day one or day two, and it was always very expensive for what it was. It was like 3530 times the out year estimate.

But the company continued to grow and grow and it stayed expensive for like 15 years, but.

Ritholtz: It was a great stock.

Danoff: Yeah it kept growing. It stayed expensive so sometimes an expensive stock that executes really well.

Can be a great story. You know they added frappuccinos. They went out to the overseas and it worked in China but it it worked everywhere in the US and you know no one else was able to replicate. I remember Peet’s came in and this one and that one. And you know McDonald’s was gonna offer, you know, cheaper coffee and try to upgrade. But anyway.

So sometimes you have to say. A truly outstanding franchise with a great management team and a great business model. Can be a great stock. I mean, the analogy in sports would be you know what do you pay Michael Jordan or one of these truly exceptional athletes?

Ritholtz: Whatever the heck he wants. If they you know hit the three pointers and win the championship, you’re gonna pay them a lot of money so.

Danoff: One of the lessons is that you know better businesses are going to trade at higher peas and you just have to accept that. Now, of course, your listeners have to monitor, you know, a retail investor can go into the stores. They’re out there comparing. You know what Starbucks is doing, the quality of the coffee, the experience in the cafe.

You know how is the mobile order and pay experience? You know? How is the app? Is it easy to use? Is it delighting main? You know some of the great entrepreneurs in the last decade have talked to me about, you know, what would the world look like without my company? And, you know, during the kovid pandemic, I think a lot of people have said.

You know, if I didn’t have Amazon.

My world would be significantly worse, and isn’t that a great place to be if you’re a partner with, you, know Jeff Bezos and and the Amazon team, or, you know there are other. A handful of companies that are, you know, Costco. I think is is one of those special companies that have delighted their members over many years, and.

You know, so many people said my gosh, do you believe you know what I just got at Costco? It was such high quality and such a great price. That’s the type of company that over 30 years.

It is you sort of say, gosh I wish I had more own more of those. And by the way, it’s it’s not. It’s a little easier than you know. When I first started in the early 90s as a fund manager, I was trying to find companies that no one else had heard of that no one else owned, and.

You know there are a lot of stuff businesses that are selling cheap and I was running around saying cheap and getting better. Let’s try to find a turn around an you know, turnarounds. Sometimes work. They can be really awesome stocks when they do work, but the degree of difficulty is higher.

Than just saying my gosh, you know Google is just unbelievable. You know how did we live without Google? Or you know, how did we live? You know, without Amazon, for example.

Ritholtz: You coming up on your 30th anniversary right? By the time this broadcast, it’ll be September 2020. You started at the Contra funds in September 1990. Did you ever imagine imagine you would be running the same exact fund for 30 years.

Danoff Honestly, Barry, no, I think you know. Again, as I said, Fidelity is a great place to manage money. There’s some very very talented and and fun people and we, you know, continue to attract some really good people. But it’s it’s the kind of place where.

Ordinary folks can do extraordinary things when they work together an they communicate and you know, I’m sort of the Woody Allen of Fidelity. I just show up and you know, I show up to more meetings and you know, I remember one year I had an odd 7:00 AM meeting, which is the early. Usually our meeting start at 8:00 AM, but.

Somebody wanted to see me or somebody was there. So we did a 7:00 AM meeting. So then the meeting ends at 8 an. I’m kind of hungry. And I see that somebody else is hosting an 8:00 AM meeting that hadn’t started, so I go into to grab a muffin and then the host and the management walk in. I think it was Joel hosting an Irish Bank, so I was like oh high and they thought I was there to see the meeting. What I really wanted a muffin but.

Anyway, I was like. Yeah, sure, I’ll I’ll listen to your story. I you know I I had to Fudge it and so we listened and it turned out that the Irish economy was coming back an I don’t know because it was Ireland. The stock was like at 8 times earnings and there were only like 3 banks.

Of any size in Ireland, and you know it turned out, there’s a certain serendipity involved with the business, that again that Fidelity. There’s so many companies, sometimes Joel and I are just like what do you? You know what’s going on right now? Is there a call that could be of interest? Or is there a company management coming in? You know every week?

You know, on Fridays I look at the schedule for the next week and it’s just like, oh, these are two companies that are in at the same time. We gotta move one of them or wow, you know, I definitely have to see this company because you know, oil and gas is way out of favor and you know, this management team has done a decent job surviving overtime and.

You know the ability to stay current. On lots of industries and lots of geographies and and then there’s sort of lock every once in awhile. You meet management that help you. I mean again, over 30 years, Barry. One important. You know clearly the the you know the old one. Internet bubble burst was, you know, an important event, but what was most important I think, was the aftermath.

In this sort of 03/04. Most growth investors were still hiding under their desks. They were shell shocked. In many cases, they were experiencing outflows. And I remember again, just. You know, seeing on our meeting schedule? A company meeting for ask Jeeves, a ASKJ shorter but we.

Ritholtz: Early early search engine

Danoff: Exactly an I believe it’s now owned by interactive group, but you know, again, it’s like what motivated me to say. I think I should go and hear this story. The stock had I think, had gone from like 5 to 100 and was back to like bottom deck two and it was at 8 so I said You know 100 to 8 means expectations are low. Maybe I’ll learn something.

You know, and again at Fidelity you can, you know between you and me I can go in in 1/2 hour. Learn something and then politely leave and you know, I guess I I take my job very seriously. You know, I have pictures of my shareholders in my office.

And I just decided, you know if I’m going to do my job, I’m in the I’m in the fashion industry. I’ve got to look and consider all possibilities. If management has come, I think ask Jeeves was based in New York, not in California, but you know if management has traveled all the way to Boston.

Right to our offices to tell us what’s going on, I should at least attend and I should be ideally prepared. I’ve just told you 2 stories. Barry, where I wasn’t prepared, but, you know, engage with management. Ask some intelligent questions, try to understand. And empathize with management. You know, sort of what has happened. Where are you going, what your goal is so.

Ask Jeeves, had hired a new CEO bright young man. And he said our niche is natural language search, which means in Google you would type in, you know population, Morocco and Google would figure out what you wanted. But in ask Jeeves he would type in what is the population of Morocco and that you know they had like One or 2% market share and the goal was to go to five or six and that was going to sort of lead them to.

Profitability and in a much bigger business, so at some point I forget we had a young search engine analyst. I guess I can’t remember who’s hosting the meeting, maybe a small cap analyst or fund manager, but I said can we just step back and explain you know the lay of the land for search engines?

So you know he sort of flippantly said, well, you know Google is crushing everybody. They have 40% marketshare. Plus they’re doing the search for. I think it was AOL, so they had 40% plus the 15 or 20% that was AOL related search. So they had 55% market share.

And they were crushing everybody. And then I think Yahoo had bought Overture and maybe Microsoft had some skin in the game somewhere, but you know, it was like 55 to 60, then a 25% player and then it several. You know, very smaller players. So again, you know very. I don’t know what happened, but I just.

You know what’s the key to my success? I just say why you know or please elaborate. So I said God, Why is Google doing so well?

Ritholtz: And what was the answer?

Danoff: The answer was, you know, they have a better algorithm. They have a larger index because they have so much marketshare. They’re seeing more searches and you know they’re just innovating faster, and I think you know, as I said, You know the quote and I.

I would have to check my notes and if you want Berry I do have my notes from that meeting. You know they are crushing everybody. There is no way we’re gonna catch Google. We are our plan does not. We don’t need to beat Google at what they’re doing. We’re going to play in this little niche. So again, by that point, Barry, I was already.

13 years into Contrafund an I had developed this idea of best of breed and I, you know, listen politely to the ask Jeeves story for another couple of minutes and I excused myself and in my mind I was thinking. I want to own Google.

Ritholtz: That’s what I was hearing between the lines. They convinced you to buy their competitors.

Danoff: Exactly, so again, you know by attending meetings by paying attention you know, listen. Your readers can listen to podcasts. They can listen to YouTube interviews, which I would highly recommend they do. They can read the papers. They can pay attention. They can watch what their kids are doing, they watch what their friends are doing, but.

You know that was a data point by a well placed competitor that clearly showed that Google was doing special things and with a special company so and I think at that time, maybe it was 03. They were already perhaps a couple of articles about. You know, Google hiring Eric Schmidt as a CEO? Preparing to go public. Whatever it was, there was some groundswell of articles about Google.

And so I was very interested when Google announced they were going to go public. And again, the backdrop was the the growth investor was struggling the mark. I can’t remember exactly what was happening in the market, but they came public in August of 04 August. You know, here we are in August of 2020.

You know things quiet down a little bit. People were taking vacation, but I was there, front and center Sergei Brin and Eric Schmidt, you know, came on the road show. And again, you know, do a little preparation, open the perspectives and Google had doubled their revenue in O2.

Double the revenue in 03 and double the revenue in the first quarter of 04. It was like Oh my gosh, they’re doing something right. You know? By the way, operating margins were like 20% or 25 even and they had a billion dollars of cash on the balance sheet before they went public.

Ritholtz: Amazing. I’m gonna share it. I’m gonna share a very quick Google Story and it is that. It was 2002 and I had been publishing for a few years on Yahoo, Yahoo, Geocities an I get an invite to be a beta tester for one of the early versions of Google an.

You just had to use it for 10 minutes and Oh my God, this is so much better than anything you could find. Whatever you want almost instantly. So I write back and say happy to be a beta tester. By the way, I’m in finance. Do you guys need any money? I’d love to make an investment. They write back. We’re good. Thanks anyway.

In 2001 or 02, but it was so clearly so clearly superior so, well, let’s talk a little bit about your process. How do you look at a company? Where do you begin? Not every Google falls into your lap through a competitors. How do you start the process of deciding what you want to? Think about purchasing.

Danoff: Yeah, that’s a great question Barry. And I would just urge your listeners that if you want to.

Invest you know wisely over the long term you know you have to make a commitment. You know it’s a very competitive world, but you know know yourself. Stay within your circle of competence. I mean, Warren Buffett is you know, the greatest investor of our generation and you know he’s out there on YouTube. Please listen to a couple of interviews with Warren Buffett.

He always talks about staying within his area of expertise and you know he knows the insurance industry really well. The financial industry knows consumer product very well and in a fascinating way. Barry, he always says, you know when the Internet hit, you know, I was curious if the Internet was going to affect the people were gonna be drinking Coca Cola or chewing gum and he decided not.

But you know you have to monitor what’s happening, but, uh, you know I’m interested in companies that I think are going to be bigger and better in the next, you know, call of three to five, 7 years an I’m interested in companies that are doing well or getting better right now. That was one of the Great.

You know insights you know. Talking to Peter Lant, working with Peter went watching Peter Lynch, you know, especially the small and Midcap companies. I mean it you know as we talked about with Google I mean if if you’re a billion in revenues you know why shouldn’t you be growing much faster than a company with 100 billion of revenues and?

You know, so if you really have something special.

Consumers should know it and see it. And you know want it. So I I am intrigued with the subset of companies that are growing quickly and usually frankly Berry. It’s easier to find, you know, to go from the specific company.

To the sort of neighborhood or the general theme that it is to start our priority and say, Oh, Gosh, the Internet. Therefore, you know, I’m going to find some Internet companies. For me it’s, you know, starting bottoms up and you know, I think your listeners and you know potential investors.

Are well served by saying OK, what has this company done in the last five years?

You know, have they grown their revenues? Have they improved their margins? You know, have they expanded into new markets, you know, and then try to understand what management wants to do in the next five years and.

Try to decide you know what you think. The likelihood of that management team to execute on their plan an you know. So I’m a little concerned when you know these special purpose acquisition companies are coming and you know they really don’t have a track record so you know I always say.

Let’s see what you buy and what you pay and try to assess the management team that’s doing the buying. And you know what have they done. If they sort of good at, you know, rolling up companies but not so good at integrating them. I’m not that interested.

Ritholtz: How much of this is art and how much of this is science I? I was going to ask it. Is this a qualitative assessment? Is this a quantitative assessment?

But you strike me as someone who is preternaturally insightful at evaluating companies management’s and products. It’s not just here’s the numbers anybody could look at the cage. Or anybody can look at the Ibadah. Not everybody can consistently pick companies that beat.

The index so, so how much of this is willdan off magic and how much of this is something else?

Danoff: It’s probably a lot of something else. Barry, because I don’t have that much magic, and I certainly after 30 years, I’m not sure if I have any magic left, but it’s it’s competitive and you have to play to your strengths and you know, as I said, one of the advantages of of, you know, a Fidelity is.

The management teams are willing to talk to us and and, you know, share some of the insights.

That they have, and ideally you know you’re in the business of asking good questions. I’m in the business of asking good questions, so I do try to empathize with management and you’d be surprised. Very even the most successful CEOs like to be recognized.

They like to be thanked for their efforts. You know, they like to be treated as you know, sort of guests. And as you know, special people. So when these management’s come to Boston, you know I like to be prepared. I like to offer them, You know, some water or coffee, or a donut or whatever they want, and.

You know, sometimes we have lunches and it’s just a matter of you know what do you like for lunch? You know, I don’t want you to have a a cheeseburger if you don’t like cheeseburgers. So anyway, you know, I, I do think that.

A little empathy as an investor goes a long way. And you know, I, I do think that if if you step back and try to put yourself in the shoes of an entrepreneur and think about you, know what is, you know this CEO really thinking about an.

You know that I think makes you a better investor as well, because so often you know they’ve had a a big idea where they’ve added insight. You know the Michael Dell? Let’s go direct. You know, the PC business was it was a commodity business, but he figured out you know a better way to get closer with customer, but.

You know when you think back to you know someone? I think he was in high school and he started to, you know, take computers apart and put them back together and add certain features. You know. I think he was adding floppy disk drives or hard disk drives. I forget he, you know he he was able to soup up.

You know, a basic IBM PC and then other PC’s to make them better. You know it’s just like this guy has a passion for what he’s doing an try to tap into. You know where do you see the bigger opportunities? Why are you doing well? Where do you think your vulnerabilities are?

And if you have these discussions early on, you know in your learning about a company.

Maybe later you know three or four years down the road. That becomes a really important issue that you know, these entrepreneurs often have a sixth sense of.

You know what they need to do, and then of course hopefully their planting seeds. And you know, strengthening their company, hiring new executives that can, you know, prepare them for whatever competitive onslaught or the change in the market so that they can capitalize on it, but you know you do.

You have to decide you know is the executive in it for the money or in it to build something really special. I mean we talked about, you know, am I trying to build a company where people are gonna say my gosh I can’t. You know the world is a better place because of you know Instagram or WhatsApp or.

Um, you know?

Whatever my you know, Microsoft, you know teams you know it’s a different. It’s a. It’s a. It’s another way of looking at things. And you know, I think somebody like a new company like Shopify really is dedicated to making entrepreneurs you know more successful helping merchants.

So online in a very you know, sort of easy way and you know they’re building the. You know what seems to be a very powerful business and you know it’s taking off and Covid has been a huge tailwind for them. But again, when you listen to management and you know you can go on Twitter and follow the founders there.

Or, you know, go on YouTube and listen to some interviews and decide for yourself. Are these the sorts of people I want to partner with?

Ritholtz: Quite interesting so well, let’s talk a little bit about the nuts and bolts of running a fund more or less as a single manager. How does that affect your decision-making versus so many funds that seem to be run by committees?

Danoff: That’s a great question, Barry.

That Ned Johnson, who you know I believe, is the Chairman Emeritus of Fidelity now, who built the firm. You know, from the mid 70s through let’s say, 2015, so a great 40 year run.

Believed in accountability, and I think you know in life we all have to be accountable so.

He really liked the idea of having single managers responsible for individual funds. I am responsible for the performance of the contrafund. I have a great team of analysts that I work closely with and in some cases I will buy a stock the recommendation?

Of an analyst, but usually.

I work and say you know, OK, what are you covering? What do you like? Why do you like it? And if this is your very best idea?

And you think this company is doing something special and they’re going to gain market share profitably overtime? Let’s just call the company together. Let me know next time you’re going to do an update call or a post quarterly earnings call and I’ll just hear the story myself. And, you know, Peter winch used to joke and say we’re just.

Asking for a picture after someone offers you a blind date. You know we want to do some basic work and you know Joel Tillinghast, my great you know long time colleague. Just as you know if you would simply avoid unprofitable companies that you know would improve your performance significantly now.

The world has changed in 30 years and the biotech industry is become bigger and better and leveraged to all these great insights into the human genome so that you can go from losing a lot of money to FDA approval of a drug that turns into a billion dollar blockbuster very quickly. But you know, for the most part, I think you know there are certain lessons that we’ve learned, but you know when do you sell a stock Berry? You sell a stock when you have a better idea, or when the fundamentals deteriorate so.

If you’re casting a wide net, you’re you know attending a lot of company meetings. You’re listening to a lot of calls. You know I don’t know. I think over 30 years, Barry, the numbers are, you know, let’s say on average I talked to five management teams a day. That’s 25 management teams a week. 50 weeks, you know. In a working year 1200 companies. Yeah, year over 30 years. You know some crazy number of of company meetings. You know 30,000. You know interviews. I’ve had that.

You know, as I said, the poker game. You know, this one sounds a little better. I’m going to buy this one. This one sounds a little worse. I’m gonna sell this one. It’s sort of like tasting I I’m I’m a chef making the master Stew that everyone is gonna hopefully love. And you know, but you gotta taste the Stew all the time. It needs a little more Pepperell is a little.

More salt, a little less of this, you know, that’s sort of the day-to-day operation, but hopefully you know every year I can find, you know, one name. You know, maybe one name a year that I can make a large position.

Ritholtz: So I have so many questions about that exact thing and I I’ll ask a short one and then, a more nuts and bolts. Longer question. So you doing over the course of your career 10s of thousands of company calls? Yeah, how finely tuned is your BS detector? And let me let me phrase that.

Danoff: More nicely when you’re speaking to a manager, do you get a pretty immediate sense of hey, this guy is telling a great story because there’s a really something substantial underneath or hey, this guy is a salesman and he’s selling me a line of stuff that I’m not. I’m not biting like how.

Ritholtz: How do you read people in those calls.

Danoff: Yeah, Nobari You You made a very good point earlier that you know your emotional quotient is very important in this business, but I would say sitting across the table and asking some very basic questions can give you a very good sense of Management.

You know, are they humble? Are they honest? Are they willing to, you know, be realistic?

But you know you have to understand as I said, OK, you know, this management is traveled halfway around the world to talk to Fidelity. You know. Yeah, maybe we are the largest shareholder. Or maybe we could be the largest shareholder. But there’s a reason why this management team is here. Why is it?

You know, and often you know there is a reason you know they want to do a secondary offering and raise money they want to do an acquisition and therefore they want to a higher stock price. So they have a richer currency to do the acquisition. But you know, I, I would say that 99% of the management teams that we talked to are honest and you know? Once in a while you know different people do tell.

The stories more humbly or more arrogantly, but you you want to see, as I said earlier, you know management with passion I I would say one way to reduce the risk of you know the aragoncillo is to watch how the.

Entire management team at Drax, and ideally you see you know more than just one great leader but an entire team. You know the CEO, the CFO, the CSO, you know. Does the entire C-Suite sing the same? You know, song from the hymn book you know, are they all on the same page?

Do they work well together or do they seem to, you know? I remember, you know. Again, it all goes back to you know I was the retail analyst. I’m, you know, at a dinner with the The Great Sam Walton, you know one of the you know, truly great. You know post war. Yeah an you know people are asking all sorts of questions and Sam was like well.

You know Jack Schumacher? Why don’t you answer that one? Don soderquist? Why don’t you take that one? Paul Carter. Why don’t you take that one David glass? Why don’t you take that one and you know he was.

A very affective leader and you know, you just realized that this was a very powerful culture. You know we’re going to lower prices and you know, sort of enable. You know middle class Americans and rural Americans you know, deliver better life by, you know, sort of being more efficient.

You know, embracing you know you think back and again I I didn’t appreciate it at the time, but Sam and his team were aware of salt prices, new price club, which was the membership warehouse club. They copied it or experimented themselves. You know they were open to a new idea and they you know started the Sam’s Club business and I think.

With Sam’s, then they sort of learned about the food business, which became very important and started opening Supercenters you know, and they were aware of Carrefour and France and I don’t know how it’s pronounced MEIJERS, which was a hypermarket up in the upper Midwest. So you know, again, you want to see management’s.

That are open to new ideas, open to adjacent markets willing to experiment. You know. I like the management so you know we’re going to try a few things. They may not work. They may not. You know I did really well early on with George Sherman at Danaher. You know, in George, you should always talk about.

You know one like business reviews and the Danaher business system and you know he had studied the Great.

Plants, you know the manufacturing techniques in Japan, the Toyota business system doctor Oh no. And then he went to Korea, but you know, it was like George, you know, tell me about this and you know Chukka Chukka which was I think the either the Japanese or Korean term for just in time inventory and the idea of reducing waste.

Barry, this is like, you know, waste is time. It’s wasted inventory. Waste is like if you have to move from, you know one part of the kitchen to the other part of the kitchen. You know you just sort of say This guy can go deep and you know so yes, there is some arrogance for a successful.

Executive and you want to be careful about that. But again, when you know what I would have loved during this kovid. Is to be able to zoom with management teams. And there are a large portion frankly of American management teams that have.

Emphasized and prioritize the health and safety of their colleagues, and it’s been, you know, very inspiring to hear you know these. These great executives understand that they have to be on the frontline. They have to make sure their people or are safe and, well. A lot of the companies have invested a lot of money.

You know, in protective gear and you know, thinking hard about the return to work and you know. So anyway, yes, it it is a concern and again I would urge your listeners YouTube. These executives decide if you like their arc. You know how did you come to this company and you know what was the.

The Great Insight, and I mean let’s, let’s remember you know, Bernie Marcus was fired by Handy Dan and you know he started the Home Depot in his 40s so you don’t have to be a college dropout at, you know 20 years old to start the latest tech company. You experience matters and if you are dedicated.

And you know, have the right skill set you can, you know, be a great success later in life I I do like smart, motivated, passionate folks who have done it before. As I said, You know, what have you done for me in the last five years? What are you going to do in the future? I mean, I remember when Mark Zuckerberg came out on the IPO roadshow.

And you know, you know what’s the right question for a 27 year old who I, I think at the time had 3/4 of a billion 750 million daily active users. You know, it’s just like what you have accomplished is is remarkable, you know, and then try to learn from these folks. And anyway, then you want to try.

I mean it was. I remember Mark showed up in a T shirt and a hoodie and I was like that’s great. That’s what we want. We want somebody to be who they are. But I will tell you that I projected my Facebook account which had like 30 friends on to you know, the conference room wall just to.

Try to make him feel a little more comfortable. It was just like we’re engaged with our product, and when Evan Spiegel from Snapchat came publicly, analysts made a Snapchat story. When he came in and we we showed it to Evan and he loved it. You know you gotta kinda try to connect with these executives. At their level, you know. Like when I was the stores analyst.

And even now, as a fund manager, when these companies come around, it’s just like we should go shopping together. Let’s go to your store together. You don’t want to be in a conference room. I don’t want to be necessarily be in a conference room. Let’s go out there. And Jason Weiner is one of my close colleagues has done a great job with some of the Fidelity funds and.

Growth funds and you know, for awhile there every time management was coming in early in sort of the early days of the Internet he was going on to their website and is, like you know, you talk about you know what Management says and what they’re doing is like this. All sounds great, but I don’t see any of those initiatives on the front page of your website.

And it was just like, oh. You know why not? That’s a good question. Yeah so anyway. But the other point, Barry and your listeners have to keep in mind that. Whatever Management says there Is accountability. You know, every quarter you know, Warren Buffett doesn’t like quarterly earnings. You know Jamie Dimon doesn’t like quarterly earnings. But the reality is, every quarter.

You have more fundamental data by which to at least analyze what has happened. An every industry is cyclical. Every industry is affected by Kovid or the global financial crisis or the Internet bubble. But it should make sense. Oh gosh, you know?

Argentina oil prices spiked in the last quarter or therefore our raw material costs went through the roof. Our gross margins were down, but guess what? It’s a two quarter phenomenon and we’re going to be back to more normal level. You know the airline. Oh God, oil prices you know jet fuel went way up. Our margins were down, but that’s going to affect everybody in our industry. So we’re going to be relatively OK. We’re still expanding. We still have, you know, a low cost operation because we only use the same Boeing 7, three sevens an the other guys are going to struggle. Blah blah blah so.

Ritholtz: Sounds It’s like Southwest .

Danoff: I remember meeting the Great Herb Kelleher and I, I think one of my questions one, you know. Again, Fidelity is a great place to manage money, for whatever reason. Herb came in an everybody was at a tech conference or everybody was at a Healthcare Conference. I think there were two other investors and me in the meeting.

And I was like Herb, the Great Warren Buffett says, you know, he got. You know he lost a lot of money in USAair. How can you make money in the airline industry? Don’t buy better the wrong airline. We talked a little.

Bit about the idea of flexibility and you know what is management supposed to be doing. Management has to pay attention and he gave some example that when Midway Airlines was opening up or there were some new gates, they called and said Hey someone cancelled on us. We’ve got 6 gates.

You know it was like a Thursday afternoon, but do you want him? You gotta let us know ASAP and herb and his team like pulled an all nighter and by Friday afternoon they said yes we want them. And here are the terms that we want and they negotiated. But you know, that’s sort of what an active manager should be doing. We you know you have to pay attention and hopefully you bet.

Big when you see a big opportunity.

Ritholtz: Quite fast enough so, well, you’ve mentioned so many fascinating stories about so many companies, Walmart and Starbucks, and Costco and Amazon and Southwest and Home Depot. I gotta ask how many of these companies are you still long or more?

Generally, when you find a company like a Home Depot or a Starbucks, how long do you stay with them and how can you tell when something is just a temporary wobble or a more significant threat to the business model?

Danoff: That’s a great question Barry. And again, we’re always learning where.

Always trying to improve and I’ve made so many mistakes over the years, but I’d say maybe in the last 15 years I realized that.

Lowering my turnover would change my process to think longer term and therefore sort of raise the bar of the companies that I was buying to say, hey, if you think about it, Barry, if I am going to own this stock for the next 10 years

It better be a really high quality company and I better have a high degree of conviction that the company is going to be bigger and better in the next five years. So maybe I want to do another couple of months of research to make sure I really understand the company’s competitive advantages. I really know the management team and the entire.

You know culture of the company and why they’re gonna do so well and better understand their product, road map and the innovation and the competitive sets. So that’s helped Maine a lot an so you know, I’ve I’ve tried to stay in companies and not be faked out and sort of.

Again, what is sort of market noise you know? Worried about some tweets or you know some concern about inflation or you know the dollar moving this way or that way, which is sort of irrelevant in most cases to the strength and long term profitability of a company.

I would say and I’d urge your listeners, and I’d urge you to think about this idea of when in doubt.

Check the fundamentals. When in doubt, listen to the latest quarterly webcast. When in doubt, look at the latest presentation to investors. When in doubt, you know if you were. If you can call the company.

Ritholtz: So that because it’s really intriguing and I have to ask you. Most people go out, they buy 1000 shares of stock. They can jump all in or all out very easilly. You’re obviously swinging around a lot more. weight, how do you enter any given stock? Is it a position that you put a toe in the water and build overtime? Do you have a specific strategy? I know some people like to. add to what’s working and subtract to what’s not. How do you own an Amazon or a Home Depot is it? Is it a slow gradual process or what? What’s the method behind that?

Daniff: Yeah, as I mentioned earlier Barry, we all would love to have huge amount of conviction. You know when I think about.

Some of the great investors I know. You know, the bill Millers, the Henry Ellenbogen’s. You know, I think they have more conviction than I do or they get it earlier. I’m trying to improve and you know often it can be a meeting where you just, you know, meet someone who’s running.

An important division or a smaller division and you’re like, wow, I was out at PayPal and I met someone there who I thought was really exceptional. And again when you can visit with the management team and get beyond, you know the CFO or the treasurer or even the CEO.

And meet some of the people who are in the field who you know truly know the product set and the competitive set. You say, wow, you know this makes sense to me. So anyway. Whatever it takes to get. conviction and you know, I’ve told the analysts if you don’t understand something, tell the management you want to fly out to headquarters and you know spend more time. It’s OK, you know.

No one lightbulb. Sometimes I’m spending a lot of time when I’m talking to management, they’re like, well, why don’t you guys own more stock and I’ve gotta say, I, you know, I made a mistake, but you know one of the great lessons over 30 years Barry and this is important for all your listeners. If a stock has doubled or even tripled.

You have not missed it and I don’t like to give all my secrets. But if a stock has doubled or tripled, you have not missed it. You have to say, you know, have the mental whiteout that Peter, who enjoys, talks about for the past and say what is going to happen in the future. Because let’s step back. Bill Gates, Michael Dell, they didn’t sell after the first double.

They didn’t sell after the first triple, so yes, I do think it’s an excellent idea to say I would like to own this stock for the next decade or two decades, because I understand, you know, the niche that the company is fulfilling. I think it there in a big market. I think the management team is going to continue to innovate and continue to grow.

Make rational decisions about expanding and developing new products and they they understand their customer. They want to delight their customer blah blah blah. So the reality is Barry that I was influenced by Warren Buffett. I was with Warren and 2012 he invited.

Fidelity to do an MBA day in Omaha and you know we were all. I was given a chance to ask him a question. I said Warren. I’m managing 100 billion dollars. What advice would you give me? And he said when you have a good idea of that big an if you look back and you know we were influenced. Joel and I were influenced by Peter Lynch who had like 1000 stocks and.

In Magellan and Joel still runs with a huge number of stocks and low price stock funds. You know, he’s he’s an exceptional intellect and can handle that, but the number of stocks in Contrafund fell. I literally looked at I think I might have had 500 or 600 stocks at the time and I just said let’s look at the bottom 300 and say upper out.

And I looked at the top 50.

And Peter always talks about this. You know, the best stocks are probably stocks you already own. You need to bet bigger. So I was more concentrated, you know. But you mentioned earlier what you know what’s really happening right now.

Technology has been a massive tidal wave. the Internet and software. Great Marc Andreesen, you know, said it best software is eating the world. It it. It’s it’s more efficient. It makes less mistakes. It’s enabling.

You know people all over the world to connect with each other, and so the software. Some of those yeah. So the software. This is the sort of the short answer. Is the software industry.

Is growing rapidly.

It’s highly profitable and the you know many parts of the tech industry are not capital Intensive. The Great Apple, you know, Steve Jobs is a genius to convince Hon Hai, Foxconn, to make the phones for him so he earns a high margin.

And he doesn’t have to spend a lot of money building factories.

But you know, you think about what you know Amazon is done generating a lot of free cash flow, apples generating a huge amount of free cash flow. Facebook is generating a huge amount of free cash flow. Microsoft is generating a huge amount of free cash flow technology. The tech industry is knowledge based, it’s higher margin and for the moment.

You know it’s still growing because it’s a global industry.

Ritholtz: Those are three of your biggest Holdings. You just ran through there. Yeah, yeah. Facebook in Microsoft. So someone I mentioned to a friend I was interviewing you an I said if you’re going to ask and he’s a tech geek and runs a tech focused Hedge fund I said if you’re going to ask will Danoff a question about technology, what would it be? And he surprised me with why the S&P 500 as a benchmark? Aren’t you really more of a Nasdaq 100 guy an? I thought that was kind of an interesting observation, adding. Respond to that.

Danoff: Yeah, there’s a lot of truth to that. I am much more of a growth investor. I am in my opinion, a capital appreciation fund with a growth bias, so I do have a go anywhere a large grow anywhere component and it’s just the technology has been such a powerful tidal wave that I’ve probably stayed in technology. Longer and bigger than you know. I would have expected benchmarks are important and Fidelity for legal reasons does not want to change the benchmark. It’s actually sort of time consuming and cumbersome to change benchmarked. It probably.

Ritholtz: Makes the S&P 500 is hard enough to beat as is.

Danoff: Yeah, you know, I mean, there are some of my larger, more institutional investors who do look at, you know, the Russell 1000 growth you know versus Contra and there. I’m not as frankly, the performance has not been as good and I don’t know if if my bench was the Russell 1000 growth if I would be even bigger.

In some of these names, but so that’s interesting. You know? Yeah, I mean I it, it is what it is I I do think benchmarks are important. I mean what what? Larry Fink and you know John Bogle did with passive investing has been really good for the individual investor. You know you don’t want.

To be in a situation when you know, Oh my God, Danoff + Reinholtz have lost their fastball. I’m gonna sell the beauty of the index if you just buy an index is I’m gonna own the index and I’m going to. I’m going to buy the index every year with my 401K contribution and you know when I retire. I’m hopefully going to have a nice nest egg to retire with as opposed.

To to you know within our Stocks with individual funds. You gotta, you know you’re worried and you know human beings worry a lot, so I’m worrying a lot for all of my investors. Barry trying my best so.

Ritholtz: So I bet they’re worried about when you’re gonna retire. You’ve been there for 30 years. Do you have any plan on leaving anytime soon? Or are you going to run Contra for another 30 years?

Danoff: You know I the stock answer Barry is that. I feel like an add value and as long as I feel I can add value I’m going to continue to run contrafund. As I said, Fidelity is a wonderful place to manage money. We’re hiring new analysts, young analysts all the time every year, and it’s those young analysts that provide extra energy.

New insights sort of an open kniss to new ideas. You know what do I know from tinderandmatch.com, but you know, if I can ask the young analysts, you know what phones they are using, what apps they’re using? You know, tell me about this technology you know again.

If you think air BNB is going to go public. You and I if are we gonna sleep on somebody elses couch or in somebody elses apartment. Uber. Are you gonna get into somebody’s car often when you hear the story for the first time, you’re like no way but you have to keep an open mind. And by working with my younger colleagues they help me stay.

Open and you know, try to embrace change in the new ideas and you know what I think about the future. You know whatever power, artificial intelligence and machine learning are gonna make this great software industry even more productive and even better, the intersection of.

Software and healthcare. If you think about all the you know, hopefully the great advances that are going to be made and and health and preventive Medison through. You know, leveraging big data and AI, it’s just remarkable and you know, I’m I’m optimistic.

And I think you know, I think the US is a leader in the software industry. An in Internet technology. You know when you think about virtual reality and artificial reality and you know ambient computing. I mean this whole idea of Alexa. You know, Jeff Bezos, you know, it’s a great experimenter. He.

He’s a great inventor and to, you know, be able to walk into a room and talk to the computer. And as I understand it, pretty soon you’re gonna be walking down. You know you’re in New York, you’re walking down Madison Ave. Oh Barry, we know you like frappuccinos, there’s a Starbucks around the corner.

You can get 10% off right now.

Ritholtz: Sounds like a scene out of the movie minority report. Yeah, with exactly.

Danoff: Yeah, well, I mean, you could imagine is going to happen. Yeah, you know. And then of course all the innovation around the green industry and ev’s and solar and wind. I think that it’s going to be these US companies and.

In Silicon Valley and the entrepreneurs are going to find better ways to, you know, to do things. And hopefully consumers are going to benefit, but.

Ritholtz: Sounds optimistic.

Danoff: As investors you know we have this great opportunity to partner with you, know Elon Musk or.

You know other truly exceptional Jeff Bezos, Mark Zuckerberg, Marc Benioff. I mean, these these are truly exceptional people. An you know here. We are you know, John Q Public and can be a partner buy a share.

Ritholtz: I know I only have you another few minutes. Another 3 minutes so let me plow through my speed round questions. And let’s see if we can get through these quickly. What are you watching these days? Any favourites on Netflix or Amazon Prime?

Danoff: Yeah, I don’t have a lot of time Barry, but I did really like father, which is so so yeah, I like the intensity I guess. I guess I think I’m a sucker for for thrillers and.

You know I I liked House of Cards and you know I’m a big shareholder on Netflix. And I think what Netflix is done is is truly exceptional. And if I had to, I would. I would just Google the you know Netflix Top Ten. I’ve enjoyed a lot of that stuff, but father is my favorite of all time.

Ritholtz: Let’s talk about books. What are you reading now and what are some of your favorite?

Yeah, during kovit I I really enjoyed a book called City of thieves, which is about Leningrad during the war. A good friend recommended it and and now right now I’m reading this biography. The One Volume Biography of Churchill.

Forgetting the author, but it was published and like 2 two or three years ago, and I mean it’s just remarkable. His parents sort of ignored him, but he was an exceptional talent. And again, Barry. One insight is if you find a CEO or an entrepreneur who’s exceptionally smart like Winston Churchill was exceptionally smart.

You know they’re going to possibly do really exceptional things, and you know he made his. He made a lot of mistakes, but you know when his time. He did the Nazis. Yeah, you know when the time came he was the right guy. So you know one thing over 30 years you try to collect. Executives and sometimes their sector, is out of favor, but when they come into favor the you know the best of breed companies shine.

Ritholtz: What sort of advice would you give a recent college graduate who is interested in a career in asset management?

Danoff: I think you gotta, you know, learn to swim by jumping in the water.

So.You know, start a paper portfolio and and start investing. Ideally you know.

Get your yell, lawnmowing savings or whatever savings you’ve gotten. Even with you know $1000. You can buy a couple of shares of of your favorite companies. You gotta get in there, but the access to information has changed so much. Barry in the last 30 years when I started as a retail analyst Fidelity.

My first job was to like write letters to the companies, send me the investment packet, send me the last two annual reports and you know the last quarterly report and the 10 Qi mean it it took like 2 weeks to get started and now you know it takes 2 seconds to Google, you know IBM investor relations.

You know you can YouTube the new CEO. You can do your work sort of instantaneously so you know you just gotta get in there and and do some research you know. Listen to the webcast and you know, place your bets. So I I think you you know you just gotta get in there and do it and you know not everybody wants to but.

I was a sort of a mediocre analyst and you know, overtime by doing. I have learned what works for Maine and the only way you’re going to learn your style, and you know what works for you, is to actually do it. And you know you gotta be accepting you know. Mistakes are a big part of this business. Try to learn from your mistakes. You know the Great George Vanderheiden Who. Was a great mentor of mine.

And I learned a lot from George. You know, he talked about keeping an investment diary on one little, you know on one little index card, or you know whatever the the digital version of index card. Why am I buying the stock? You know, I’m gonna buy, you know XYZ Company.

At $50 a share becausw there expanding into II is a huge opportunity. I think you know they’re earning $2 right now, but if they continue to grow outside of India by 10 to 15% in India adds, you know another. You know 500 million of revenue at a certain.

Margin I think they can go from $2 of earnings to $5 in earnings.

Ritholtz: Let me let me ask you our final question. Now what do you know about the world of investing today? You wish you knew when you first joined the contrafund 30 years ago.

Danoff Barry, we’ve talked a lot about sort of best of breed.

Great entrepreneurs, I I guess. I wish I had invested bigger with. You know these superior managers, when they were younger and you know earlier on you know if I had met Sam Walton when he went public and I had that, you know insight to say wow, this is an exceptional story, but what’s so hard? Barry is when you first meet the company.

As I said earlier, with air BNB or Uber, it’s like what are you talking about you know, or you know there’s always the skeptic and you have to try to anticipate and see around the corner. And it’s not easy, but that that’s what I would. I would encourage people to, you know.

Keep thinking about the future. Keep thinking about trends. Stay within your circle of competence and stay flexible and continue to cast a wide net. You’ve really got to look everywhere. I mean, if you think about what what’s happened in China, you know. I think China’s.

Grown their GDP 10% a year for the last 30 years, you know it, it’s gonna overtake the US. You know probably in the next decade I mean, just it’s it’s remarkable what com pounding can do and you know you just try to anticipate and project out.

Into the future implications for you know what you’re hearing right now and you know, just try to stay informed, but you know there’s a lot of opportunity. Yeah, it’s really great.

Ritholtz: Thanks will for being so generous with your time. That was Will Danoff. He runs fidelity’s contrafund if you enjoy this conversation well, be sure and check out any of the previous.

300 or so we’ve had over the past six years. You can find that at iTunes, Spotify, overcast stitcher, wherever your finer podcasts are sold. We love your comments, feedback, and suggestions. Write to us at MI B podcasts at bloomberg.net.

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