Larry Robbins Quotes
101 Larry Robbins Quotes
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[In 2011.] We know that the key is to realize that on January 1, when the sheet reads zero point zero, we have to remember that it’s not about what you did before, but about that persistence and continuity of work effort. So I believe that remembering that always having that focus is what differentiates us.
Larry Robbins
[In 2011.] The economy was like bowling with gutter guards. In the late ‘90s, which was the most wonderful time for the market in the last hundred years and probably will be for the next hundred years, the ball just rolled down the middle of the lane and never deviated. It was 4% economic growth with very low inflation. There was a small scare in the emerging markets in the third quarter of 1998, but if you actually just started at the U.S. economic statistics, there was little deviation. So you had almost no volatility in the economy, combined with gridlock in Washington and low valuations as starting points, so it was like a ball rolling down the middle, hitting the head square-on and everyone getting a good score at the end of those five years.
Larry Robbins
[In 2011.] In the last ten years, it seems like there have been a couple of gutter balls, where things have just gone way off to one side or another.
Larry Robbins
[In 2011.] The right gutter is inflation or hyperinflation… We think that gutter is easier to hold, because from a zero-interest-rate policy, it will be easy to tighten things and slow it down. It is not really easy to do that without bouncing us right back to the left gutter again.
Larry Robbins
[In 2011 on 2010.] It was as normal of an equity market as anybody has seen in the last ten years. The equities basically did treasuries plus eight hundred basis points of return. That is close to what the textbooks say equity markets are supposed to return overtime.
Larry Robbins
[In 2011.] The principal basis upon which we invest is not based on any one particular economic forecast, but the question for us is - ‘Can the economy grow fast or can the economy grow at all?’
Larry Robbins
[In 2011.] U.S. corporations came into 2010 with $1.4 trillion in cash, the highest level of cash held in the U.S. every by non-financial public corporations, so it is not just world banks holding excess levels of cash to ensure liquidity. Despite the fact that we saw increased buybacks and M&A activity, they still ended the year with $1.5 trillion in cash. This is a high-class problem but it is nonetheless a problem, with $1.5 trillion earning precisely zero. It is a lazy asset.
Larry Robbins
[In 2011.] Companies were initially sitting with all the cash, feeling good, thinking that no matter what happened, they… had excess cash. Even if their bank failed, they would be ok. Now, we are getting to a point where in 2011, people are feeling stupid about wasting the asset and are starting to think about deploying it.
Larry Robbins
[In 2011.] If you own an undervalued equity… either somebody else will buy that company, the company will buy back its securities at a discount, or the company will do something intelligent by buying another company in a disciplined manner. Going from 0% return on that equity to something like a 10-12% on the equity should be pretty doable.
Larry Robbins
[In 2011.] Basically, we are in the recycling business. There are very few businesses that are public companies today that we haven’t looked at…
Larry Robbins
[In 2011.] Nielsen Media is becoming a public company next week. I owned Nielsen Media before it was called Nielsen Media, when I was working for
Leon Cooperman. It was then part of Dun & Bradstreet, then it was part of Cognizant, and then it was spun off. So it is funny that our services team presents this great new IPO, Nielsen Media, and I am dusting off a memo from 1998.
Larry Robbins
[In 2011.] Even though there are 7,000 public companies in the U.S., when you narrow your search to companies with market cap sizes and type of businesses that make sense to us, we are really dealing with maybe a 1,000 or 1,500 truly investable companies that fit our definition of a good business.
Larry Robbins
[In 2011.] Idea-generation is more about idea revisiting today, than it was when we started our fund.
Larry Robbins
[In 2011.] You can get some exogenous event where the security price movement then causes the change in management. Or a regulatory change, such as in healthcare recently, can bring something to our attention.
Larry Robbins
[In 2011.] Sometimes we’ll go to a conference and we’ll see a presentation of a company which looks like it knows what it’s doing. We then do intense research.
Larry Robbins
[In 2011.] Despite the uncertainty, healthcare stocks did what they are supposed to do: grow regardless of the economic environment. Lots of stocks went down, but the company earnings went up and that therefore created the double-whammy for valuation.
Larry Robbins
[In 2011.] Any industry which has regulated profits is worth less than one without.
Larry Robbins
[In 2011.] In the first half of 2009, nearly every business was in contraction. Yet, pharmaceutical consumption went up 3% in the first half of 2009 in the U.S.. Why? Because there’s no choice. It’s based on demographics and it’s not a nice-to-have, it’s a need-to-have.
Larry Robbins
[In 2011.] If you’re a sick person, you don’t think about your spending in terms of percentage of GDP. You think about it as what is necessary to do.
Larry Robbins
[In 2011.] If one wants to reduce the cost curve, the best way to do that is to introduce competition throughout the system such that there is a price transparency and proper economic incentive to deliver either better quality at the same price, or the same quality at a lower price.
Larry Robbins
[In 2011.] If someone goes and gets an artificial knee, the person paying doesn’t determine what brand they get. In fact, those companies have 80% gross margin and 50% operating margins.
Larry Robbins
[In 2011.] You need to create for-profit incentives for for-profit companies to create competitive environments to drive down prices or drive up quality of outcomes. The best way to get people to do it is to pay them to do it.
Larry Robbins
[In 2011.] Normally, pharmaceutical services are a good business, because there is population growth, growth in pills per head and there is innovation.
Larry Robbins
[In 2011.] When you own the highway, and 10% more cars go through, you will collect 10% more tolls.
Larry Robbins
[In 2011.] The third reason we like McKesson is that it is grossly overcapitalised, or at least was grossly overcapitalised. They had $1.5 billion of net cash on a business that could easily be levered a couple of times debt-to-EBITDA. So coming into last year, we believed they had $700-800 million of dry powder that was earning nothing and could be earning 10-12%, where the accretion math could be quite powerful. They deployed about half of it last year. They did $1 billion of stock repurchases and authorized $1.5 billion more. They spend a couple of billion dollars buying U.S. Oncology. So they deployed about half of the bucket, but of course the bucket replenishes every year as they generate free cash flow.
Larry Robbins
[In 2011.] Starting out in the hedge fund business, I spent ten times the amount of time evaluating an investment than I did interviewing a person. Yet that person will impact ten, twenty, or thirty stocks in your portfolio, so you should do much more diligence on that person than you do on any individual investment.
Larry Robbins
[In 2011.] It is worth spending the time to find and pick the right people… I wish I knew that earlier.
Larry Robbins
[In 2011 on being long Tyco.] We could not conceive that management would be accused of effectively embezzling company money by using restructuring charges to fund personal expenses like apartment relocation and renovation. It was inconceivable to me that you could have fraud on such a massive scale. Six years later, it was inconceivable that Bernie Madoff could have a multiple-billion-dollar fund that was a ponzi scheme, that you could have fraud on such a massive scale… So I think I have a little bit better appreciation today, and I wish I had then, to not only expect the unexpected, but just how bizarre and severe the unexpected could be.
Larry Robbins
[In 2011 on the lesson of ‘Not only expect the unexpected, but just how bizarre and severe the unexpected could be...’] We learned that lesson by being caught short Volkswagen in a short squeeze where we had twice as many shares borrowed as we were short. We had borrowed them under lock for a term that was between three and six months, depending on which shares we had. So even though we had recognized the potential for a short squeeze, we had thought that we had taken care of that. Yet when the stock quadrupled, prime brokers increased by twelve fold their margin requirements that we had forty-eight hours ago. This meant that no matter how many shares you had borrowed, you did not have continuity of ownership. So things like these cause you to think expansively about just how many 1% tail risk are out there and to be humble about just how many of those things you can control, to make sure you balance and survive.
Larry Robbins
[In 2011.] One of the difficult things about being a good fundamental investor is that you want to start out with all of the information, but then you want to synthesize it down to just the important factors. It is always a struggle to not be myopic…
Larry Robbins
[In 2011.] You want to make sure that you constantly think about and react to new information. But you do not want to be chasing your tail. You want to be focused on the truly important things.
Larry Robbins
[In 2011.] We publish these fifteen page quarterly letters because it forces us to write down and communicate in a very clear fashion what we think and why we think it. There are a lot of crumpled up pieces of paper that end up next to the garbage can when we do that. Yet, a lot of times they are a reminder that there are a couple of questions that we still have about an investment that we really should be addressing.
Larry Robbins
[In 2011.] Here is the catalyst, here is the valuation, here is the bear-case and why we can defeat it. The easier you can do that, the more valuable you will be…
Larry Robbins
[In 2011.] Working with
Leon Cooperman was a great educational opportunity to learn by observation. He did not sit me down and teach me lessons every day, but I had an opportunity to observe the way he would interview management and how he would manage his team and investments.
Larry Robbins
[In 2011.] If you truly are a sponge, you can learn a lot in many different environments.
Larry Robbins
[In 2011.] We know that we are habitually early. We try not to be, but we still are. We started a debt-only fund in the third quarter of 2007. There were almost no opportunities in corporate fixed income on the long side in the preceding eighteen to twenty-four months. But, given the fact that mortgage prices cause capital calls at certain places, they started selling off higher quality paper at significant discounts. We began to accumulate distressed debt in late 2007 and early 2008. Not too long after, our returns were wonderful (15% annual returns, net of fees, over a twenty four to twenty eight month period.) Of course, corporate credit fell off in the third and fourth quarter of 2008, so it was not a smooth 15% return and the timing could have been better.
Larry Robbins
[In 2011.] We are all trying to learn how to time our investments better. But we would much rather suffer a bit of a drawdown than not take advantage of an opportunity.
Larry Robbins
[In 2011.] You should be a voracious reader and sponge of information from other investors. With all the ideas out there, you do not have to agree with them or adopt them, but you should consider them.
Larry Robbins
[In July 2013.] There were a lot of irrational fears around Obamacare.
Larry Robbins
[In July 2013.] The hedge-fund industry acts like traders, not owners. Lower prices have induced selling, not buying, in the marketplace. The rationale has been to preserve capital because the system could crash.
Larry Robbins
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