Brookfield Asset Management (BAM) Investor Day

Brookfield Asset Management (BAM) CEO Bruce Flatt said Asian insurance companies are shifting more of their portfolios into alternative asset classes

“Alternatives and foreign investments by Asian institutional investors continues to increase and some of those are just regulatory changes. China used to have a 5% cap, originally 3%, then 5%, now it’s 15% on foreign investments in insurance companies, and a lot of the amounts of money being driven out of Asia and out of China is really driven by these regulation changes that are happening in the funds and all of those things are shifting people towards more real assets and alternatives.  We think the trends will continue despite, irrespective of interest rates increasing and whether they put another 25 or 50 or 75 basis points on the short end.”

They believe that having boots on the ground is a competitive advantage

“One of the big advantages we have in real asset investing is that when we’re investing, developing a piece of real estate, building a toll road, running a power plant or running any one of our real asset type businesses, it’s hard work. It takes operating skills. It takes people. There are a tremendous amount of issues every day and that gives us a huge competitive advantage over a financial player or someone else that’s just going to do it on their own or someone that just starts up tomorrow morning. It gives us a big competitive advantage over them.”

They think the asset management and private equity market will grow to be $70 trillion in the next decade

“We think that industry that we’re marketing towards will continue to head towards around $70 trillion into the 2020s, and that we’ve put together the backbone to manage the growth and there’s really two things they want. They want investment performance but they want to be taken care of and we’ve invested the money to have the compliance, the governance and the servicing capabilities.”

All about relationships and good investment performance returns

“We have significant relationships that we’ve built with institutions to co-invest beside us and that allows us to do things which other people can’t and really it comes down to in an environment that we’ve been in. We’ve been able to generate the returns that are on this slide, which on the opportunistic side are in the 20s and in the core and value-add side are in the mid-teens, which are very good returns. These include the financial crisis vintages.”

They believe the Brazilian economy has likely bottomed out

“Interest rates look like they’re going to be low but commodities and emerging markets are definitely recovering and we think that Brazil has bottomed and I’d say we saw that based on the fundamentals of the businesses we have there in February or March of 2016, this year, and it’s going to be a slow way back but we think it’s slowly coming back.”

Doing large scale transactions which not many can compete with due to the size of the assets they’re going after

“If you think of the pipeline we just bought, it’s $5 billion; it’s in Brazil and it takes operating capabilities to underwrite and operate, and not many people could compete with that.  The fact is we just try to find spots where other people are not.”

Brookfield Asset Management (BAM) CEO Bruce Flatt wants a dividend policy which gives him flexilbility to buy assets during a market correction 

“We’ve had a view over time that we didn’t really want to have a high dividend policy, largely because we wanted to ensure that at the bottom of the market we could make unbelievable investments that allowed us to do things that others could never do.  It’s amazing what availability of capital does in the business. So you never want to have to go back and retrace your dividend with your investors because they really get mad at you.”

Brookfield Asset Management (BAM) Q2 2016 Earnings Call

Brookfield Asset Management (BAM) CEO Bruce Flatt said there are only a few places for rational capital deployment in a world of negative yielding sovereign bonds

“in essence there are only four places globally for this money to go and the first is U.S. Treasury. The second is corporate and asset backed bonds. The third is equities and the fourth is real assets. And real assets, predominantly real estate and infrastructure which are specialties are among the safest long duration investments for earning decent returns in this context for the type of institutions that own these securities.”

Good investors can still make money in this market

“You’re going to see moderate growth even in the best countries in the world and/or more moderate growth than you would have expected in the past. Despite that, some of the returns versus where interest rates are can be very attractive to real asset portfolios. And I just think if you look at what we can earn on real assets across the spectrum, you’re getting paid enormous amounts compared to Treasury bill or a U.S. Treasury or something like that and it’s probably — we’re at historic highs as the differential between what you can earn on a real asset, even on a core asset, versus an opportunistic asset to an interest rate Treasury. So look, I think we’re going to be in a more moderate growth world for a long time and a low — lower interest rate environment for a long time, but I still think that you’ll be able to — good investors will still be able to make a lot of money.”

 

Brookfield Asset Management (BAM) Q1 2016 Earnings

Brookfield Asset Management (BAM) CEO Bruce Flatt categorized the market opportunity set as “good but not great” 
 
For all the noise you hear right now both the headwinds for stocks our view is that the markets are pretty good, not great but overall conditions are positive for most companies. Rates remain very low; North American banks have never been in better shape as a result liquidity is excellent with few exceptions in specific industry. Corporate balance sheets across North America again with a few exceptions are very strong and companies are expanding certain sectors.”
Low interest rates are forcing institutional investors to look to other asset classes outside of equities and bonds to invest
 
Turning to fund raising, as Brian mentioned against the backdrop of low interest rates and the volatility in stock markets we believe our real asset strategies have significant appeal in particular for institutional investors. Property, infrastructure and private equity are excellent places to commit capital for those investors with long liability such as pension plans and sovereign wealth funds. We spent the last decade building out our global scale in all of our businesses and has allowed us to be heading to close $30 billion of capital for our current round of funds.
Brookfield Asset Management (BAM) CFO Brian Lawson said they’ve raised a substantial amount of capital and thus have a lot of dry powder to deploy to buy assets
 
So turning to our asset management results, fee bearing capital was $104 billion at the end of the quarter, up $11 billion over the last 12 months. And subsequent quarter end capital raised in our private funds added an additional $10 billion of fee bearing capital bringing the total to $114 billion, and increased our annualized fee revenues and target carry to nearly $2 billion. The increases in fee bearing capital came from a final close on our $9 billion flagship property fund along with commitments of approximately $12 billion to our latest infrastructure fund and more than $3 billion to our private equity fund.”
Customers keep coming back to re-invest
 
We are targeting an additional $6 billion of capital on our marketing efforts which also include three niche fund. In our strategies we have seeing the vast majority of investors in the last generation of funds coming back as participants in our successor funds.”
Beginning to see attractive investment opportunities
 
And at the same time our capabilities to put this capital to work and manage the assets has never been stronger in terms of our global scale and operating capabilities and we are seeing a wide range of attractive opportunities. To that end we have already investor or committed more than half of the capital in that $9 billion property fund I mentioned that we just closed.”
Attracting more capital from Asia
 
And probably the second biggest change over the years has been Asian institutional investors have continue to put money into real assets and into funds and into investments outside of Asia. And so those commitments have been growing. Probably both because our name is known and our relationships are better, but also because there is more significant amounts of capital coming from those types of groups today.”
Brookfield Asset Management (BAM) CEO Bruce Flatt highlighted the company’s size and large asset base as a competitive advantage
 
We try to focus on transactions that we have a competitive advantage with and I guess we try to focus on three things, number one is and often people heard us say that it’s size of capital we have more money than most people to invest in transactions and that just allows us to do things, which a lot of others can’t do just because of the size of transaction and we bought the Columbian Hydro Company recently for $5 billion and they are just weren’t too many people that could fund $5 billion to do that transaction. So size just helps us to eliminate ourselves from the crowd or separate ourselves from the crowd.”
Seeing Chinese companies buying international assets should not fully be mistaken for a dash to get out of the Yuan currency
 
The one thing that we are seeing is very significant amounts of capital being invested from China to other more developed markets. And again the story gets confused because most people interpret that that as people taking money out of China and wanting to have it out of China. And that’s possible some of the money is that. But a lot of it is that the institutions in the country have been encouraged to invest outside of the country. And they’re starting to go from they initially where zero percent outside of the country for example in the insurance companies and over 3% now they’re allowed 15% foreign investment. China now is going from 0% to 15%. You may never see that 100%, but that will continue to increase overtime. And the size of the amounts of money is very, very significant in these institutions.”

 

JS Earnings Call Transcript 2.18.2016 – Express Scripts, Brookfield Asset Management, Trupanion, Axalta, Arch Capital, iRobot, Whole Foods

Express Scripts (ESRX) CFO Eric Slusser said they are focusing on reducing costs

“As a management team, we are focused on improving healthcare outcomes for our patients while reducing costs. We are driven to create efficiencies across the organization. For example, working hand in hand with Chris Houston, who leads our core operations, we are simplifying operating complexities, eliminating redundancies and reducing our cost to fill. We are focused on a common goal to reduce costs within the organization while enhancing the service we provide to our patients and clients.”

Express Scripts (ESRX) President Tim Wentworth highlighted the increasing costs of drug prices as an area of focus

As we look to the future, we see many more ways for us to improve healthcare. When we deliver on the two things our clients need most, controlling costs and achieving better patient outcomes, it is both a growth opportunity for us and a testament to our business model of alignment. We have a strong financial and operational foundation to build upon and we are differentiated with unique solutions that are in high demand and we will always lead, even if it means taking actions others cannot or will not.  While our clients face a challenging environment with rising drug prices and increasingly complex regulations, we stand with them, working together to find innovative ways to strengthen the pharmacy benefit while improving care.”

Express Scripts (ESRX) President Tim Wentworth says the company will grow alongside clients

“We are well-positioned for the short- and long-term for two important reasons: first, the value we provide clients has never been greater, and second, there is a growing appreciation for our unique business model of alignment.”

Express Scripts (ESRX) President Tim Wentworth said they may enter the healthcare information technology segment if they found the right acquisition

I think HCIT, there’s a lot of fragmentation there. We obviously have a lot of internal capabilities that we can invest in, but as we look out both from a payer and a provider standpoint, there may be some interest there.”

Express Scripts (ESRX) CEO George Paz said they’ve been able to save clients money by shifting how they buy their pharmacy drugs

“The savings in that are significant for our clients. So, one of the biggest things you can do to manage your cost is by really focusing your buying on the most efficacious, best-priced products and driving into those areas. I think it’s there that the savings are quite substantial. And there’s other things such as driving mail order and doing Specialty Management properly.”

Express Scripts (ESRX) CEO George Paz discussed the company’s relationship with pharmaceutical manufacturers as it relates to drug inflation

“First of all, just at a macro level, the way Inflation Protection works is that we’re able to go out, we contract with the pharma manufacturers who make commitments around sort of the maximum pricing that they will take above which they will, through us, create value that we can then build back into the programs for our clients. So in essence, we go out, we don’t reinsure because we’re not taking true risk in an insurance sense. What we’re doing is we’re sort of out there contracting with pharma and then passing that back through the program that we’ve got. So it’s a very – it holds pharma accountable, and at the same time, it puts our clients in a great position to the extent that inflation is higher than what we were able to cap it in these contracts.”

And described it as a mutually beneficial relationship

“In effect, we provide an excellent way for those manufacturers to get to market in a way that is responsible, that creates maximum access for their innovative products, that ensures that there isn’t wasteful behaviors taking place”

Express Scripts (ESRX) CEO George Paz says they can still drive out costs from their business as a result of recent mergers

We still have an awful lot of inefficiencies in our mail order service that we can still go after and we think that there’s still a significant room to run there, so I do believe that this is going to be an annual exercise for us. It always has been and it will remain an exercise to focus on costs. What’s adding value to our patients and whatever isn’t, get rid of it. And that will stay our goal.”

 

 

 

 

 

Brookfield Asset Management (BAM) CEO Bruce Flatt says the company is benefitting from client’s increased interest in real assets

Our institutional and sovereign fund partners continue to increase their allocation to real assets.  With each of the funds at least 50% larger than their respective predecessor, this sets us up well for continued growth in the business. To answer the question, many have asked us, we continue to see very strong allocations from institutional clients for real assets from every market in the world, some with large increases to the sector.”

And he sees attractive investment opportunities now in specific emerging markets

With respect to investment opportunities, we’re seeing significant numbers of investment opportunities that meet our investment criteria across the board. This is the result of the accentuated macro themes over the last few years that we’ve been focused on namely, number one, the lack of capital in the emerging markets.”

Also seeing value in the high yield market after recent sell off

Specifically to the U.S. high-yield market, we’ve been and are investing significant amounts of dollars into high-yield bond positions today across most of our funds at what we see as exceptional yields to maturity and some which may turn into further opportunities in those funds.”

Brookfield Asset Management (BAM) CEO Bruce Flatt says the company is benefitting from negative interest rates in Europe as clients look to make investment in real assets that will hold their value

The European market will exhibit very slow growth for a long time and real assets may be the only place to find yield in a market where trillions of dollars of government bonds have been forced to negative yields by quantitative easing.  We’ve been finding exceptional assets to acquire and we’re able to finance them with very long-term low rate financing, generating strong cash yields to equity and we hope to continue to do this.”

Brookfield Asset Management (BAM) CFO Brian Lawson said they are being opportunistic about deploying capital in the oil & gas sector

Probably the biggest [area] that has changed is the oil and gas markets, as you know, have deteriorated very significantly in the last six months and that’s caused a lot of stress in a number of areas, and commodity prices have changed a lot.”

Brookfield Asset Management (BAM) CEO Bruce Flatt discussed the differences between the European credit market and the US credit market

The thing I would say is, there are opportunities around the world. They come in different forms in different places in different types. What the U.S. capital market has versus every where else, is the widest and deepest market. And secondly, most of its credit is listed in trades with CUSIP number. And therefore you can buy it in the second-hand market easily as opposed to as you mentioned in Europe, it’s mostly in a bank market. So they’re just much more accessible opportunities in the short-term versus some opportunities you might otherwise find from a banker something else in Europe. They are just more difficult to access.”

 

 

 

 

Trupanion (TRUP) CEO Darry Rawlings said American consumers are spending more on pets regardless of the economic environment

“Pet owners in the United States love their pets. In fact they spent more than 60 billion on pet products and veterinary care last year.  Their spending level has been increasing even through recessionary periods. As the costs of veterinary care continues to increase, so will the need for our product. There are more than 160 million cats and dogs in the United States and only about 1% currently have medical insurance plans.”

Trupanion (TRUP) CEO Darry Rawlings highlighted the company’s mission driven culture as a competitive advantage

“We talk a lot about competitive advantages but one aspect that we don’t mentioned often enough is our mission driver culture probably because it’s difficult to quantify.  Borrowing from a book that often gets quoted back to me, the plain truth is that talented people work the hardest when they are proud of what they do. When their jobs are interesting and meaningful, and when they and their team members are recognized for their contributions in share and benefits. At Trupanion, we are seeing that in action.

Trupanion (TRUP) CFO Mike Banks said customers continue to see value in the product as evidenced by the high retention ratio

Subscription revenue were up 28% year-over-year, driven by 27% growth in subscription pets and by continued strength in our average monthly retention rate which was 98.64% for the fourth quarter.  Our focus on providing a superior value proposition in customer experience drives strong customer loyalty which Trupanion pet owners staying with us for an estimated six years on average.”

 

 

 

 

Arch Capital Group (ACGL) CEO Dinos Iordanou said the reinsurance business is facing a multitude of headwinds and irrational competitors

To invoke a bit of a sailing analogy, we are facing headwinds in our reinsurance group, overcapacity, pressure on ceding commissions, more excess of loss purchasing at inadequate pricing. So, that describes a bit the reinsurance market conditions. “   

In their opinion, there are too many insurers willing to underwrite policies without being compensated for the underlying risk

 The returns there are just not satisfactory. In our view, capacity is plentiful. In short, the lines of business where we are focusing our efforts still provide us with expected ROEs on allocate capital in excess of 10%, but the days of low hanging fruit are gone. Our reinsurance group net premium written has declined 26% in the fourth quarter of 2015 versus fourth quarter of 2014, led by decreased writings in our short-tailed segment.”

As a result of fierce competition, they are re-focusing on less commoditized product lines

While macro events and the interest rate environment have brought down total ROE expectations to a new normal level, we are positioning ourselves in all of our underwriting units, focusing on specialty niches that have some inherent competitive protection and for which we believe we will achieve our 15% ROE target over the cycle.”

Arch Capital Group (ACGL) CEO Dinos Iordanou said he doesn’t want his underwriters to go to the competition

Let me give you also a little bit of the strategic view that we have when it comes to expenses. I said many, many times in many calls we are not willing to par with our underwriting capability. So we are going to maintain underwriters even if the market might cause us to reduce underwritings because we are going to maintain underwriting discipline and complete commitment to our good people, especially on the underwriting side.  I am not going to give my underwriters to the competition. So, we are going to maintain that, because our view of the market is more long-term than short-term. These are the same underwriters that generated significant profits for us when the market was good for reinsurance and that market will come back again to supply and demand and at some point in time, it will readjust.”

Arch Capital Group (ACGL) CEO Dinos Iordanou said risk analytics are becoming an increased point of emphasis for the company

And if you are not willing to assess risk appropriately and price it appropriately, at the end of the day, you might be subject to adverse selection over time and we don’t want to be in that category.  This is not something that as one of our competitors says it’s just some black box that spits out. It’s a lot of effort, a lot of analytics, a lot of historical data that we have used.  Everyone we have is a quant here, except me. But I keep up with them.”

 

 

  

 

 

iRobot (IRBT) CEO Colin Angle said America & China were its strongest geographical markets during the quarter

As a result of these efforts, Home Robot revenue grew more than 30% in the fourth quarter, driven by sales in United States and China, which were up 46% and more than 70%, respectively, over Q4 in 2014.  We need to better position ourselves in China to capture an even larger share of the rapidly growing market for robotic floor care.”

New distribution channels and effective advertising helped drive sales

Exceptional domestic growth of 46% in Q4 and 25% for the full year over 2014 was driven by investment in ad media, national promotions, launch of the Roomba 980, and the addition of Target as a new channel in the fourth quarter.  Our Roomba marketing programs were highly successful in the United States and we saw significant return on investments.”

They will be spending their incremental marketing dollars in Japan

During 2016, we will focus our marketing efforts on the Japanese market where we have already kicked off several initiatives. If we are successful, we should start seeing impact on demand generation by the end of the year.”

iRobot (IRBT) CEO Colin Angle said they are launching a new home robot this year but remained elusive on what type it will be

We do plan to launch a new Home Robot product in the first half of the year, but I’m not going to provide any additional information on timing or product category at this time.”

iRobot (IRBT) CEO Colin Angle remains optimistic on e-commerce sales in China

We think that long term, China is a tremendous market that could in the relatively short term become our largest market outside of the United States.  We expect to focus primarily on e-commerce. That is the most rapidly growing path to market in China.

They divested their defense and security business to focus solely on the home category

We believe that the growth opportunities in Home are immense and accelerating. And crucial to achieving those growth rates is both product leadership within the Roomba category and the establishment of the second leg on the stool, and within Roomba that means connectivity.  And given our market share, we are scaling the connected robot business at a very, very fast rate and so we’re pushing at sort of the bleeding edge of a lot of different back office technologies for connected product and are also making investments to ensure that the information that the robots are collecting is being done in a way that we can leverage in the future for the performance of the robot and also as part of an important element of the connected homes.”

iRobot (IRBT) CEO Colin Angle addressed privacy concerns related to their home robots

The overarching philosophy that we have relative to privacy on our Home Robot is, let’s be cautious. The 980 robot as is currently architected, all the information collected stays resident on the robot. It is our expectation to slowly allow some information to flow up to the cloud but it will be done with the permission of the owner, because that owner actually wants to enjoy the benefit of that information going up to the cloud.”   

 

 

 

 

 

 

 

Axalta (AXTA) CEO Charles Shaver said the company is benefitting from lower gas prices

We believe that refinished demand will continue to benefit in 2016 for lower fuel prices, which correlates well with increased miles driven, and accident rates as well as the purchase of larger vehicles that consume more paint.”

Axalta (AXTA) CFO Robert Bryant said increased efficiency helped improve margins

The impressive 220 basis points improvement in the adjusted EBITDA margin that Charlie mentioned reflected the volume and price tailwind noted previously, as well as savings from cost improvements and productivity enhancements offset in part by ongoing investment to support growth similar to prior periods.”

As well as increase market share

We are increasing share in global markets as we introduce new products, globalize our existing products and apply discipline and metrics based management to a business that was formally not a focus area for the previous owners. Our success is paired with a persistent focus on increasing productivity and creating a durable operating model that emphasized customer service, while definitely minimizing our cost structure to ensure we can compete effectively.  I think overall we are growing a little faster than the market.  And we are either the number one or number two market leader in most markets.

After the companies leveraged buyout away from parent company Dupont a few years ago, they continue to delever the balance sheet

Regarding our capital allocation plans, we continue to focus our free cash flow on debt reduction, targeting leverage of 2.5 to 3 times net debt-to-LTM adjusted EBITDA.  We are content to reduce our net debt leverage as the primary use of our excess capital.”

Axalta (AXTA) CEO Charles Shaver believes their raw material costs will improve from the drop in oil prices

I think when you look at the drop of oil that really started to occur in the second quarter and then you assume approximately 3 months before you would see that appear in cost of goods sold and flow through your financial statements. It’s probably at the end of the first quarter that we really start to lap some of those benefits, vis-à-vis the lag effect on a weighted average across all of our raw material baskets.”

 

 

 

 

 

Whole Foods Market (WFM) Co-CEO Walter Robb said they are discounting some of their items to broaden their appeal to customers as well as drive traffic and engagement 

We stepped up our value offerings to customers primarily through more and deeper promotions such as our customer appreciation, love fest and three-day sale in supplements, which were supported through social media, digital ads and select radio ads. Over the remainder of the year, we plan to continue our promotional strategy including more personalized offers and increase and broaden our price investments as well.”

And they now offer Whole Foods grocery delivery in 16 different markets

Our instacart sales continue to grow nicely and we now offer delivery in 16 markets with many stores seeing sales as a percentage of total store in the mid-to-high single digits and several stores averaging baskets over $100. We are in the process of expanding the service to more stores and several new markets this year.”

Whole Foods Market (WFM) Co-CEO Walter Robb said they are launching digital coupons for the first time

In our ongoing effort to better understand and offer more value to our customers we have accelerated the first component of our national Affinity program. We are excited to announce today the launch of digital coupons within our Whole Foods Market mobile app expanding the functionality beyond recipes and shopping lists.  Coupons have been the top request among users and now with a simple scan at the register preloaded digital coupons can automatically be applied to matching items in a shopper’s basket.  This is a win for customers, a win for us as well as we will gain actionable customer data on a national scale.”

By increasing their discounting initiatives, they now expect lower margins

Based on our Q1 results, we now expect a year-over-year decline in operating margin for the fiscal year of up to 70 basis points. Reflecting increased value efforts as the year progresses, the year-over-year decline in gross margin excluding LIFO in Q2 through Q4 is expected to be greater than 86 basis point decline in Q1.”

Whole Foods Market (WFM) Chief Operating Officer A.C. Gallo talked about the need to make sure their prices are competitive

I mean there are certain very important categories that we know that we need to be competitive on an everyday basis on. And so we are  working to systematically identify those and move pricing on those to make sure that we’re competitive. There’s a fair number of items we’ve lowered prices on so far this year and have plans to do more as the year goes on.”

They will be focusing on downtown stores in urban areas 

One of the things that you can expect to see going forward particularly as Whole Foods Market is in this transformational shift is you’re going to see the Whole Foods Market stores, they’re going to be larger stores. They’re going to have a lot of innovation in them. There’s going to be a lot of prepared foods. There’s going to be a lot of exciting things about those stores. That’s why when you talk about downtown Miami or downtown LA, we’re talking about fairly large stores that are really exciting, fun stores to be in.”

 

JS Conference Call Notes: Brookfield Asset Management

Brookfield Asset Management (BAM) CEO Bruce Flatt said they are selling some of their holdings and realizing gains in what they believe to be excellent valuations

 

“On investing, we continue to see opportunities to recycle capital by selling mature assets at excellent valuations, while in tandem utilizing our competitive advantages to put money to work at attractive returns.”

 

They are seeing continued interest from Asian investment managers

 

“As an example of something occurring in the Asia, there are couple of things occurring in the Asian markets. I’d note that we recently sold a property in Shanghai at 2.5X acquisition cost a few years ago and continue to see strong interest in real assets from Asian investment managers.”

 

Brookfield Asset Management (BAM) CEO Bruce Flatt said they are redeploying capital from sectors where they’ve had significant gains over the preceeding years into areas of distress in sectors such as commodities, energy, and emerging markets

 

“In North America our view is that valuations on real assets are excellent and we’re using this environment to recycle capital by selling mature assets, and selectively putting money to work where our competitive advantages allow us to do that. By the time we’re done with this process, we expect to sell in our real estate business, for example, a few billion dollars more on properties at very good valuations.  From a deep value perspective, we’ve been investing in India, Brazil, and around oil and other commodities. For example, in Brazil we’re in the process of buying a portion of the airport in Sao Paulo and the subway system in Rio from a construction company that ran into tough times. There are strong headwinds in Brazil, as most of you know, but we’ve seen this situation before. We believe that Brazil’s emerging middle class, the strong corporate base, the abundance of resources, and believe that it makes it a compelling place to invest for the long-term.”

And the company continues to benefit from increased interest in real assets from pension consultants and sovereign wealth funds

 

“The real asset business being the allocations that institutional client’s sovereign funds are making to real assets are dramatically more than they were ten years ago.  So the numbers continue to ramp up because they need to earn out decent return on their capital versus holding treasuries at 2%.”