October 21, 2024 • 37 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence Technology and Media Analyst Geetha Ranganathan reports on Walt Disney naming James Gorman chairman of the board and saying it will appoint a new chief executive officer in early 2026. MassMutual CEO Roger Crandall discusses shift toward providing comprehensive, holistic planning solutions for clients. Julie Smolyansky, CEO of Lifeway Foods, talks about taking advantage of a dairy resurgence among American consumers. And we Drive to the Close with Miguel Sosa, Head of Market Research & Strategy at Bluerock.
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business
Wait inside from the reporters and editors who bring you
America's most trusted business magazine, plus global business, finance and
tech news. The Bloomberg Business Week podcast with Carol Messer
(00:23):
and Tim Stenebeck from Bloomberg Radio.
Speaker 2 (00:26):
I want to start with Disney because the company named
James Gorman chair of the board and said it will
appoint a new CEO in early twenty twenty six. For
where we're joined by Githa ranganathen Bloomberg Intelligence Technology and
a media analyst. She joins us from Bloomberg Intelligence headquarters
in Princeton. Geetha, we wanted to talk to you because
of what James Gorman said in his statement quote A
critical priority before us is to appoint a new CEO,
(00:49):
which we now expect to announce in early twenty twenty six.
We all know what happened last time Bob Eiger left,
and that's why Bob Eiger is back.
Speaker 3 (01:00):
Does this give you.
Speaker 2 (01:00):
Any indication as to who will be CEO and what
their priorities will be?
Speaker 4 (01:06):
Well, Tim, no indication yet as to who would be
the CEO. I mean of course, the one thing that
it definitely does address is that succession planning continues to
be the number one priority, both for investors and obviously
for the company alike.
Speaker 5 (01:22):
So that's good news.
Speaker 4 (01:23):
They obviously have a very very capable executive now running
the whole process, James Gorman, who himself kind of orchestrated
this really smooth transition, you know, in his own role
to Ted Pick. So obviously you have a very capable individual.
But you know, this Disney's experience with succession planning really
has been so botched, you know, and it's just been
(01:45):
so so messy. It's been dragging out so long. I mean,
it's the perfect business case example of what not to do.
So it's going to be interesting. I mean, we do have,
you know, many internal candidates, but they have said that
they're going to look both internally and externally, so I
think and everybody's fair game at this point.
Speaker 6 (02:01):
Yeah, it's pretty remarkable when I feel like it was,
you know, kind of Game of Thrones being extreme between
Tom's Daggs, you know, but they were like grooming to
right and they switched their jobs, and like it just
seems so logical, and they were planning can I ask
you something, why is it taking so long to find
a successor? And this isn't meant to diss Bob a
(02:23):
you're coming back, but why did he come back?
Speaker 4 (02:27):
I mean he came back because obviously of that whole
botched succession that he kind of engineered with Bob Chapik.
I mean, one thing that we do have to remember is, yes,
as much as we criticize Bob Iger for, you know,
all of these failed succession attempts, you don't have to
remember that running Disney is really really difficult. Running Disney
is very much like running a country. Right You have
(02:48):
very very different disparate divisions here. The parks as its
whole is just its whole animal on its own. Then
of course you have the TV networks, you have studios,
now you have a streaming product. So but there are
so many different elements to this and it's really very
hard to kind of find one executive who can handle
it all. So right now they have all the four
(03:10):
section chiefs. You know, you have the ESPN chief Jimmy Petro,
you have Data Walden and Alan Bergman from the TV
and the studio side, and then of course you have
Josh Tomorrow who runs the parks. The word is that
the front runners among the internal candidates are Dana Walden
from the creative perspective and Josh Tomorrow from the park
parks perspective, you know, just obviously because that's such a
(03:31):
critical element of the whole business. But what they found with,
you know, putting a parks person in charge was that
all of the creative relationships were completely destroyed and we
ran into a really rough pattern the studio side because
of all those missteps from Bob Japek. They are right
now thanks to you know, Bob Iger kind of being
back at the helm kind of fixing that a one
(03:53):
film at a time. But it has been a long
and painful process, and so it's going to be really
interesting because whom they name a successor is kind of
going to be really important in dictating, I think the
future strategy of the company. Is it going to be
is it going to continue to be parks or is
it going to be more a Hollywood type of person,
you know, with that kind of creative element there.
Speaker 5 (04:14):
Well, and we are actually, excuse me, maybe Mini Mouse.
Speaker 6 (04:21):
All I know is the creative and you know this
well that they're so they have been so good at
taking creative and then spreading around kind of the Disney
universe and making money off of it. So we shall
see KEITHA. Thank you so much, always always KEITHA ringingoth On.
She's technology and media analyst at Bloomberg Intelligence out there
at BI headquarters in Princeton, New Jersey.
Speaker 1 (04:41):
You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 5 (04:55):
So we talk a lot about insurance lately.
Speaker 6 (04:58):
Often involves the cost of back to back hurricanes, the
skyrocketing cost of home insurance, just generally. Even reading in
this morning, there's this story in the New York Times
that talked about motor vehicle insurance premiums rising more than
fifty percent in just the last three years.
Speaker 3 (05:13):
That dad sent that to my whole family.
Speaker 6 (05:15):
Right, I mean they were talking about twenty thousand dollars
for a family that obviously had some kids who just
started driving. But that fifty percent rise in the last
three years, that's according to CPI data. We all have
lots of reporting here at Bloomberg on that and some
thoughts on that as well. Right now we're tapping into
the insurance world, but not the area that's gotten all
that attention as of late. Instead, we're looking at life insurance,
(05:37):
something that many Americans have or consider having. So let's
get to our interview with us right now. As the chairman,
president and CEO of Mass Mutual, they do provide financial
products such as life insurance, disability income insurance, long term
care insurance, and also annuities. Roger Crandell is the head
of the company. He joins us from Mass Mutual headquarters
in Springfield, Massachusetts. Roger, great to have you here on
(05:58):
Bloomberg Business Week.
Speaker 7 (05:59):
How are you.
Speaker 8 (06:00):
I'm great, Thank you, good afternoon. Thanks for having me.
Speaker 6 (06:02):
Yeah, great to have you here. A lot we want
to get to. I have to ask you, and I
know it's not your world, but our lead up our
intro into you, because you're someone who understands the insurance
space more broadly, some of the trends. I got to ask,
why has it that so many different areas of insurance
have gotten so expensive? What do you hear from different
you know, peers in the industry, about what's going on,
(06:25):
and I understand climate change and storms, but is there
something more going on?
Speaker 8 (06:29):
Well, yeah, I mean I think it starts with something
that's on all of our policyholders' minds when we talk
to them about their financial plans, and that's just the
level of prices and inflation over the last several years.
So you know, you have a damage to an automobile,
damage to a home, it just costs more to fix it.
So that is clearly part of what's what's happened. You
had all the supply change, disruption of COVID was part
(06:51):
of that. Obviously, You've also had this situation when interest
rates collapsed. Insures, property and casually insurance in particular, mostly
short term bonds, really saw their income fall. It's only
now started to go back up as the FED has
been kind of raising, right, So a little bit of
a perfect storm climate change, storms, high costs to replace,
(07:12):
and then kind of damage on the capital side from
interest rate changes as well. So we are not in
that business, as you said, We're in the life insurance business.
And luckily people are living longer every day, so life
insurance has actually gotten more affordable over the last five
to ten years. So no reason for everybody not to
have adequate coverage for their loved ones.
Speaker 2 (07:33):
Does everyone need adequate coverage though, And the reason I
asked this is because life insurance really didn't get on
my radar until I had dependents. And we hear a
lot about people not having as many kids, Americans not
having kids, are waiting longer to have kids. If people
don't have kids, do they need life insurance?
Speaker 3 (07:52):
Yeah?
Speaker 8 (07:53):
Well, you know, I think everybody has people in their
lives that matter, or causes or philanthropy in their lives
that matters. So I don't know a single family who
has a life insurance policy pay that isn't happy to
have at a time of real emotional stress, some financial
stress kind of taken off their shoulders. So I think
everybody should be thinking about it. It's also one of
(08:15):
the only things that the longer you wait with certainly
I can tell you, the more it will cost. Because
the best time to buy life insurance is when you're
young and healthy. If you wait to year older, it
gets more expensive, and if, unfortunately, if you get very ill,
it can become actually on a table at all. So
I think everybody should think about having some coverage and
you can buy a policy that can be converted into
(08:36):
a permanent policy, which is particularly effective for folks for
longer term kind of objectives. So, you know, there are
a hundred million Americans who either think they need more
life insurance or who don't have insurance, and they all
tell us one way or another they would like to
get covered. So it's up to us to make it
easier for them to do that and make sure that
they've got financial professionals to talk to that can help them.
Speaker 2 (08:56):
One thing that was interesting in my process of buying
this what you know seven six, seven years ago, Carol,
is that there's gender differences too. So my wife and
I are pretty much the same age. There's a month
difference from our birthdays, but her policy is less expensive
than my policy.
Speaker 5 (09:10):
That's because we're stronger and better and I'm going to
live longer. That's just how it true.
Speaker 6 (09:13):
Is that I'm just going to put it out there.
What's your advice to somebody? Right, Like, good companies they
offer provide life insurance for their employees. You might have
to pay a little bit into it. The difference between
going that route and then just going on your own
from the get go.
Speaker 8 (09:29):
Yeah, well, think, Look, I think for those of us
that are fortunate enough to work for companies like Bloomberg
and like Master Mutual that do offer that, absolutely, I
think people should be taking advantage of it to the workplace.
But frequently, you know, you may want to consider having
more or different types of coverage. You mentioned disability income
insurance kind of in the intro. I think that's an
(09:50):
under a very much underappreciated type of coverage. For most
younger folks. The biggest asset they have is their ability
to keep working. So that's an example one where some
additional coverage could make sense. But I think it really
needs to be customized for everybody's everybody's experience. And one
of my one of the gifts that I give I've
got a step daughter a step son. Rather getting married,
(10:14):
I gave both the endos fiance a mass mutual policy
as their engagement gift. Guess what a young woman gets more.
Young woman gets more coverage for the same dollars as
the young man because women doing fact livelong or our
oldest policy holders today is a woman. She's one hundred
and two and she's had her policy for ninety one years.
So it's kind of a remarkable how long term insurance
can be.
Speaker 6 (10:34):
Yeah, I'm just going to say, like, who needs another
piece of silver that you have to polish? I would
take the life insurance policy. Having said that, I do
want to put out just full disclosure that Bloomberg does
work with you guys mass Mutual in terms of offering
up employees different benefits that you guys provide. So I
just want to put that out full transparency. Tim, I
know you have another question.
Speaker 2 (10:53):
Yeah, Roger, is there a better way to do this?
Is there a better way to understand risk using technology
and AI? I mean, when I got my policy six
seven years ago, somebody showed up to my apartment, took
my blood, did my blood pressure. But you know that
doesn't really create an accurate risk profile of what I
do day to day versus what you know, the other
(11:15):
forty something does.
Speaker 3 (11:16):
Day to day.
Speaker 2 (11:17):
Isn't there a better way to use tech in AI
to figure out these actuarial tables?
Speaker 9 (11:23):
Well?
Speaker 8 (11:23):
I mean I think the answer is maybe. So Certainly
we can do things like be able to look at
electronic health records more quickly to be able to assess risk,
because what we're trying to do is offer everybody the
lowest possible cost of insurance. And that's the difference between
buying an individual policy from a company like Mass Mutual
versus what you get at work. At work, by definition,
you've got to spread the risk over the entire insured
(11:45):
kind of population, and that works really well on average,
but for certain individuals you may actually be able to
get lower cost coverage by being underwritten yourself. So we
are trying very hard to figure out how we can
do things that are less than based than having somebody
come and take blood and other bodily fluids. That is
still a very good way to to assess risk. But
(12:09):
AI is starting to change things, maybe not as much
in the underwriting. It's doing some there, of course, it's
really going to ultimately change how the business works on
the day to day business. Our business is no different
than any others with jen AI really beginning to make differences.
Speaker 5 (12:23):
Hey, Roger, a couple things in the nitty gritty of
your business. I want to ask you.
Speaker 6 (12:26):
You guys are a notable player in the pension risk
transfer market. So basically, an insurer takes on a company's
pension assets and liabilities.
Speaker 5 (12:35):
What's the outlook for these sales?
Speaker 8 (12:37):
Yeah, you know, so at the end of the day,
most companies that still have a defined benefit pension plan
and most of them are closed to new folks entering.
It's not their core competency, right, It's our core competency
to manage investment risk and mortality risks. So it really
makes a lot of sense furniture like Mass Mutual to
carry that risk as opposed to an operating business that's
(13:00):
really thinking about how to win and compete in their
market kind of every day. So we see the market
is going to continue to grow, you know, the fact
that equity markets have done well and interest rates have
stabilized to have left the funding status of plans generally
in better shape. So we expect that there's going to
be a fair amount of this business over the years ahead.
(13:21):
And again, fundamentally, this is what we do every day,
So we're a very good holder of that type of
risk compared to the typical corporation that has to think
about all their other things and not have to think
about things like life expectancye matching durations of assets and
liabilities and risk of their bond portfolios.
Speaker 6 (13:37):
All right, but I also am I want to kind
of as a follow your own portfolio to make sure
you guys meet all of these liabilities. You guys play
in the private debt market. It's something we talk about
all the time here at Bloomberg. How have those investments performed?
What can you tell us about that?
Speaker 8 (13:55):
Yeah, I mean those investments have performed wonderfully for a
long period of time. I actually started at Mass Mutual
in a training program in nineteen eighty eight doing private lending,
first in the commercial mortgage business and then in what
we used to call private placements now you would call
private credit. The key is you have to match the
duration of your assets and liabilities. And if you have
long term liabilities like pension risk transfer or like life insurance,
(14:20):
then you can afford to take ill liquidity risk and
get paid a premium. And fundamentally, what we do for
our policyholders over a very long period of time, and
we've paid the best given end in our industry for
eighteen years in a row, is we monetize that ill
liquidity premium for their benefit. So you just have to
really be careful that you understand your liquidity needs to
match your liabilities. Really tough for someone who has short
(14:41):
term liabilities to do that longer term kind of lending
or for someone like us with long term liabilities, it
really is a very nice match. So we have decades
of experience in the asset class and it's performed exceptionally
well over time, giving us higher returns and very low
losses because of the are you of collateral or covenants
in the case of a corporate deal.
Speaker 5 (15:03):
No worry that that's topping out.
Speaker 6 (15:04):
I mean it's more and more, you know, investors and
folks and traditional financial establishing establishment get into the private
credit market. No worry that some of those returns and
games that you guys have benefited from that maybe they're
topping out. And forgive me, just got about forty seconds.
Speaker 8 (15:19):
Sure, look, I worry for a living So yes, sure, market,
yeah exactly.
Speaker 3 (15:24):
But I would say I.
Speaker 8 (15:26):
Think if you stick to fundamentals and follow the cash flows,
there's still a tractive opportunities there. There are times when
there's more money coming in, there's time when there's money
moving out. But we're very comfortable with the opportunities we're
seeing in the quality of our portfolio.
Speaker 6 (15:39):
All right, goodlie with there, great look forward to and
I hope you'll come back soon. Roger Crandall, Chairman PRESIDENCYEO
Mass Mutual joining us from their headquarters.
Speaker 2 (15:47):
Hey, attention to New England listeners. You can hear Bloomberg
Radio in and around Boston on ninety two nine FM.
It's your news source for business news from around the
financial center of New England. Bloomberg Radio ninety two nine
FM in Boston.
Speaker 6 (16:01):
Yeah, and Roger Grandall of course coming to us from Springfield, Massachusetts.
Speaker 3 (16:05):
Mutual Mass Mutual. See what they did there?
Speaker 7 (16:07):
You see what they did?
Speaker 5 (16:08):
You like how that works?
Speaker 1 (16:11):
You're listening to the Bloomberg Business Week podcast. Listen live
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New York station, Just Say Alexa playing Bloomberg eleven thirty. Well.
Speaker 2 (16:30):
You can find our next guest products in the dairy
section of your local supermarket LifeWay known for its kafir.
Speaker 3 (16:36):
You know it.
Speaker 2 (16:36):
It's like that yogurt like drink confikable yogurt movie.
Speaker 5 (16:40):
Oh okay, it's kind of yeah, drinkable. Got sorry.
Speaker 2 (16:44):
Maybe because you don't have critics, young critters.
Speaker 5 (16:47):
I have older critters older credit.
Speaker 2 (16:50):
It's a bubbly traded company about foydered million dollar market
cab but Julius and Lanski is the second generation of
her family to run the company after her father started
it and took it public a couple of years later
on the Nasdaq. Julia is chairman, president and CEO of LifeWay.
She joins us from Los Angeles.
Speaker 3 (17:06):
Julie, how are you welcome?
Speaker 1 (17:08):
Good?
Speaker 7 (17:09):
Thank you so much for having me.
Speaker 2 (17:10):
Yeah, thanks for joining us. You've got a really cool
story and the company is a really interesting one because
it's not often that you find publicly traded firms that
have such a narrow focus in terms of products. Give
us an idea of how business is right now and
where areas of growth are for you?
Speaker 7 (17:29):
Sure, well, it's an exciting time to be at LifeWay.
Speaker 10 (17:34):
Our category is the probiotic dairy functional food space and
we are seeing just a booming explosion of business. Just
the last nineteen quarters have been year over year consecutive
growth years for us, and that trend is not slowing
down anytime soon.
Speaker 2 (17:56):
Is that because of what's happening in terms of the
way people think.
Speaker 3 (18:00):
About products such as yours?
Speaker 2 (18:02):
Or are you doing things internally when it comes to
product development, when it comes to placement, distribution and the like.
What are you attributing that to.
Speaker 7 (18:11):
Yeah, I mean, I think it's both.
Speaker 10 (18:12):
I think, first of all, to just step back a
little bit, I think people really want to know where
their products are coming from, where the brands originate from.
And I think LifeWay is really the embodiment of the
American dream. It's just a remarkable story. As you mentioned,
my dad came from the We all came from the
former Soviet Union, and we were the first of forty
(18:35):
eight families that were settled in Chicago. And you know,
this idea of living the American dream was something my
father aspired to. And when he walked the grocery stores
in America, he noticed that there was no kiffir, which
was a staple product for two thousand years, for two
thousand years, something that my ancestors, my grandmother's passed down
(18:59):
generation to generation, and it was simply non existent in
the United States. And I think that, you know, and
so that's how LifeWay was started, and then he took
it public two years later. But I think consumers really
love that heritage story. They want to know that their
brand came from someplace authentic and real, not just out
(19:19):
of an AI private equity office or something like that.
And so I think that thirty eight years of legacy
that LifeWay has been bringing to American consumers and consumers
globally is part of the reason. Additionally, you know, with
this really wonderful, storied product, past of my ancestors, knowing
(19:41):
intuitively that kafir improved their well being, their health, they
attributed their centurion you know, living to one hundred years
of age based on their consumption of Keyfaer. And it
wasn't until nineteen oh eight when Ellie Mechnipoff, doctor Ellie Mechnikoff,
did the first round of science and research on kaffir
and probiotics and fermented daiies like Kiffer, and he found
(20:05):
that it did indeed help improve the body's health. And
today modern science is only just catching up on the
microbiome friendly bacteria, probiotics and kaffir specifically, and so there's
so much exciting medical research and we're LifeWay is a
brand that meets the moment. We are on every grocerysource
(20:25):
shelf across the United States, from Whole Foods and Ultra
premium markets to Walmart and Costco.
Speaker 2 (20:33):
Yeah, that's what I wanted to talk about because I
was talking to somebody recently who has.
Speaker 3 (20:39):
A startup ish food company.
Speaker 2 (20:41):
They've raised quite a bit of money and they're pretty prominent,
but she was telling me how difficult it is to
get shelf space at some of these prominent retailers. How
do you do it? As you know, you're not independent
in the sense of a startup.
Speaker 3 (20:52):
You're you're far from it.
Speaker 2 (20:53):
You're publicly traded company, but you're you know, you're not
danin by any means. You know, You're You're not like so,
so how do you do it? How do you compete
with the big players?
Speaker 10 (21:04):
Well, I think they compete with us. I think they
aspire to be relevant like LifeWay is. You know, we
have been very passionate and trend setting from day one,
and we still operate very nimble, and we are trend setting.
We aren't just following trends, but we're creating the trends.
(21:25):
We have been, you know, dedicated to putting a bottle
of LifeWay Keeper in everybody's hand, every consumer's hand, from
cradle to grave, generation to generation, and you know, building
trial showing up at culturally relevant events yoga. You know,
we were one of the first brands to partner with
(21:45):
yoga studios across the country. You can try our samples,
our products at Lallapalooza at Austin City Limits, all different,
you know, really amazing cultural moments that are relevant for consumers.
And the way that we show up to our consumers,
educating them on the importance of GOT health is one
(22:05):
of the reasons why we have had such tremendous success.
Speaker 6 (22:09):
So so okay, so really interesting story, family story. Publicly
held company, small market cap, about three hundred and ninety
million dollars. Stocks almost doubled year to date, Julia, I
am curious, so talk us through some of the metrics,
the type of growth that you're seeing, revenue, top line growth,
(22:30):
earnings growth, cash coming in. What do you do to
kind of keep growing the company?
Speaker 10 (22:37):
Yeah, I mean, you know, we have had the most
incredible historic quarters. The last five quarters were record breaking quarters.
Like I mentioned, nineteenth consecutive quarters of year over year
top line growth.
Speaker 7 (22:53):
We just hit our the second quarter this year, we.
Speaker 10 (22:57):
Almost hit fifty million dollars, which has been a number
we've had long circled in our aspirations up more than
twenty five percent.
Speaker 7 (23:07):
This year.
Speaker 10 (23:09):
Our twenty twenty nineteen revenue went from about ninety three
million to almost two hundred million right now two hundred
million run rates, So we've.
Speaker 7 (23:18):
Doubled our revenue.
Speaker 10 (23:20):
While I don't obsess about the share price at all,
I am very proud of the fact that in the
last five years our share price is up over almost
over twelve hundred percent. So you know, these are some
remarkable numbers. Our gross profit improved to a ninety two
percent increase. You know, our gross margin was up two
(23:42):
hundred and ninety basis points. So the metrics that prove that,
you know, consumers are looking for Lifewaykeeper. We are taking
market share away from other brands of other types of
functional beverages or other kind of old stale products like yogurt.
I think we're the more trendier, fashionable, healthier cousin of yogurt.
Speaker 6 (24:05):
Hey, one thing we wanted to ask you is you
know nifty function on the Bloomberg where you can look
at you know, your top shareholders and denote North America
has about what about a twenty twenty three twenty I
guess yeah. I reported that back in September and they
you guys confirmed a receipt of a proposal from Denote.
(24:27):
They offered twenty five dollars a share. You guys right
now change trade at twenty six dollars forty cents a share.
Speaker 5 (24:34):
Is there an offer?
Speaker 8 (24:35):
Is like?
Speaker 6 (24:36):
Is there is that the future that you ultimately will
maybe connect with this company, dnoone will own you? Or
is the plan to kind of keep going alone?
Speaker 10 (24:46):
Well, while I can't comment on that, I would like
to point to the incredible success that we're having at LifeWay.
We're on a really strong growth trajectory with a really
long runway and in terms of growing both our flagship
product of Kafir, but also an incredible exciting emerging category
which is not new for us, but new for the
American people, which is farmers cheese and farmer sheees. Is
(25:08):
so exciting because maybe you've noticed that last year, cottage
She's went viral on TikTok and it's all over everyone's
making blended cottage, She's in various recipes like that on
social media. And our farmer sheese is one of our
legacy products that we've been making for over thirty eight years.
It's something my grandmother's made. Like I mentioned footwog. In
(25:31):
my language, it's called buttwog. And Farmers Cheese is exploding
and we're really excited to be growing that category where
the largest manufacturer of farmers She's today and it's going
to be really exciting to scale that into all of
our locations where our Kifer is currently sold and bring
this new new category in the dairy space. You know, bioavailable,
(25:53):
high quality protein is something that consumers are really looking
for and they're craving, and that's something that Lifeboys really
has been pioneering and paving for a long time in
the natural food space, organic food space which is now
mass market.
Speaker 7 (26:09):
So that's a really exciting time for us.
Speaker 2 (26:11):
We only have about a minute left. But what's your
product pipeline look like expansion beyond Farmer Cheese and Keifer.
Speaker 10 (26:19):
Yeah, well, we are scaling our pro Bugs, which is
a pouched product for kids, Pouchkifer product for kids that
we innovated over ten years ago, and we've really invested
in some equipment and machinery to really scale that. You know,
we disrupted the entire baby food packaging space by launching
the first ever pouch in the United States for kids,
(26:42):
so we're excited to scale that into mass market right now, it's.
Speaker 7 (26:46):
A whole Foods nationwide.
Speaker 10 (26:47):
We also just announced the expansion of ten exciting new
trendy flavors lactose free. That's another big concern in the
dairy space. People are looking for lactose free products, which
Lifewai offers really exciting flavors like taro ube, macha, latte
h leachy, you know, really on trend, uh, snack able, easy,
(27:09):
instagrammable types of new products that we're exciting to scale.
Speaker 7 (27:13):
Excited to scale that nationwide as well.
Speaker 10 (27:16):
And and then we have just like a long long
trajectory of new products in the pipeline which I can't
discuss us yet, but look for more things connected to
skin gut access. We know that biotics work really well
on the skin or inside out, so some kind of
skins and friendly products brain Okay.
Speaker 6 (27:39):
Well, come back and tell us more when you cannot
give us some of the specifics, because that's super interesting.
Julie Smolanski, CEO at Lifewave Foods, joining us from La
Marco Journal about you let me.
Speaker 1 (27:57):
Drive alright, please, I'll do the gravels.
Speaker 6 (28:04):
Let's wait I want to try keep.
Speaker 8 (28:07):
It's a good question.
Speaker 3 (28:12):
This is the Drive to the Clothes.
Speaker 1 (28:17):
On Bloomberg Radio.
Speaker 6 (28:19):
All right, everybody, As you know, we're just about eighteen
minutes away from the closing bell here on Wall Street.
We talked about this with our John authors earlier that
Goldman Sachs is out saying that the S and P
five hundreds decade of big games is over. A Bloomberg
survey meantime shows participants believe stocks will keep rowling into
yur end, though the market is off to a slow
start this week.
Speaker 5 (28:40):
Come on, what I know?
Speaker 3 (28:42):
Slow start this week? I'm sorry.
Speaker 2 (28:45):
The S and B five hundreds of twenty two point
five percent so far this year.
Speaker 5 (28:50):
Last year, it's had quite a run. I know we needed, like, what.
Speaker 3 (28:54):
Are we supposed to do?
Speaker 5 (28:55):
Weekly run?
Speaker 3 (28:55):
What are investors supposed to do?
Speaker 5 (28:57):
What are they supposed to do? They're supposed to listen
to our drive to the guest? All right, so let's
get to it.
Speaker 6 (29:01):
Miguel So says, head of market research and strategy at
Blue Rock, joining us from San Diego, California. Miguel, good
to have you here on BLUEMBERG Business Week. We've got
Goldman Zach saying, you know, the S and P five
hundreds decade of big gains is over. There is also
another story on the Bloomberg about insiders selling, which is
(29:23):
never necessarily or is most times not seen as a
positive sentiment for gains in the equity market side of things. So,
how do you see it right now? This environment where
we've seen quite a run up in stocks.
Speaker 9 (29:36):
Sure, so it's been a different environment over the last
ten years versus where we are currently right in the
call it the previous decade, it was a low interest environment,
extremely favorable for equity investing. Now it's been for the
last two years or so of persistently higher interest rate environment,
(29:56):
which poses a potential headwind for equity investors. Nonetheless, as
was just mentioned, now we've seen twenty plus percent yearly
returns both this year and last year for the S
and P five hundred. So at the end of the day,
it's probably a more challenging environment for equity investing. But
(30:17):
who's to say the SMP can do what it wishes.
Speaker 2 (30:20):
It's through words i've never been spoken.
Speaker 3 (30:22):
S andp's gonna SMP hero S.
Speaker 5 (30:24):
And P's gonna S and P. Very funny.
Speaker 6 (30:27):
Having said that, investors, do you have to make decisions
and there's a lot coming at them, whether it's geopolitics,
whether it's the election outcome, whether it's I saw a
story that just crossed a little while ago, Neil Kashkari
maybe talking about the FED not needing.
Speaker 5 (30:42):
To be so aggressive.
Speaker 6 (30:44):
Let me guess, get it right here, because I want
to make sure I don't say it incorrectly. Fed's Neil
Kashkari see slower pace of cuts over the coming quarters,
Like we've seen a bit of a reset too about
maybe expectations about what the FED will do for the
rest of this year, maybe into twenty twenty five. So
as an investor, what do you tune out? What do
you tune into in terms of making investment bets.
Speaker 9 (31:08):
Yes, it's always challenging to certainly measure and predict where
the FED is going to be. If you recall back
to the beginning or the middle of this year, the
beginning of the summer, it was higher for longer. That
was a mantra, there wasn't any change to that tune.
And then come July August there was much more moderate
(31:30):
economic data, inflation, jobs reports, and that's when we started
to hear a pivot in the messaging towards reduction in rates.
We saw that come to fruition in September with a
fifty basis point cut, and now I don't want to
say another pivot, but certainly a new message of okay,
that was enough and let's moderate the interest rate production.
(31:53):
So at the end of day, I think investors are
seeing a robust and expanding economy, a healthy economy, and
much more moderate inflation, which over the long term, over
the medium term even we should see a gradual reduction
in interest rates. Whether it happens this year at the
beginning next year, it's going to be a slow process.
Speaker 3 (32:17):
So where's the opportunity then, I.
Speaker 6 (32:19):
When you guys have what some eighteen billion dollars in
acids under management, where are you putting investor money right now?
Speaker 9 (32:25):
That's correct, and in our view, we're focused on two areas.
One is private real estate. Private real estate has had
a really tough frunt in this higher interest rate environment,
but it's presenting some very attractive opportunities because valuations in
real estate are down about twenty percent, but occupancy rates
remain high. Net operating income has grown significantly over the
(32:49):
last five years, so investors receive more cash flow, but
at a discount because valuations are lower. And on top
of the fact that interest rates as they've moderated, cap
rates have moderated as well or cap rate increases. So
we're not seeing any headwinds to real estate investing in
valuation as we did over the last couple of years.
(33:09):
So when are We're starting to see a bottoming in
the decrease in real estate valuations there, which presents something
very attractive. We're also seeing attractive opportunities in alternative credit. Also,
given interest rates are higher, the tables have turned a
little bit more in favor of lenders instead of borrowers.
Speaker 6 (33:27):
So in terms of private real estate, we're specifically office
where are you finding the opportunities? And we've talked certainly
around this table over the last couple of weeks, whether
on surveillance, last week we had a great guest, David
Steinbach over at heind you know, talking about that as
deals get done, you get some transparency right on where
(33:47):
the pricing is in the market, right, you get some
clarity about that. But I am curious when you're talking
about private real estate, where are the opportunities for you guys.
Speaker 9 (33:58):
Yes, we're we're staying away from office. Office has faced
a challenging last several years, five years, and it will
continue to be challenged. In Blue Rocks view, we like
to think of it as under demolished, actually, because there's
still some pain to go through there. But in our view,
we like the industrial sector much more. There's persistent and
(34:20):
structural benefits within investing in that particular sector because more
of us continue to buy more products online and we've
wanted those products delivered to our homes faster than ever,
so that changes the demand for the warehouses that hold
those products. Those warehouses have to be closer to where
we live to get those products faster to our homes,
(34:42):
and so that's creating a very very persistent growth in
demand for industrial and specifically logistics warehouses and last mile facilities.
We also like the specialty sector. Specialty is really a
catch all term for everything that's not under the Big
four real estate. So you can think of specialties such
(35:03):
as single family rentals, data centers, life sciences, and these
are exciting subsectors because there's little to no correlation to
the overall economy. A simple example, think of data centers
we're all consuming data on our phones. We will continue
paying our phone bills and our internet bills regardless of
(35:24):
whether it's call it expansionary periods or recessionary periods. And
so it's become a part of who we are in
a necessity.
Speaker 6 (35:34):
Right, Hey, before you go, just get about thirty forty seconds.
I got to ask you, because private credit is your
other world. And again everybody seems to love a private
credit and we hear about it being kind of the
golden days of private credit. Pimco our Bloomberg Intelligence Credit
Edge podcast says had Pimco on a Pimco guests, as
private credit doesn't pay, as the hazards grow, are you
(35:56):
seeing any signs of an overheated private credit market? And
forgive me, there's just about twenty five thirty seconds left.
Speaker 9 (36:02):
Sure?
Speaker 1 (36:03):
Not really.
Speaker 9 (36:04):
We are seeing yields come down a little bit in
the private credit space, in the very small middle market loans,
in the area and the spectrum where we participate broadly
syndicated loans. There's still very healthy transactions, healthy yields there,
and so no no need for concern there or any
bubble in terms of private credit.
Speaker 5 (36:24):
All right, got to run, Hey, listen, Miguel.
Speaker 6 (36:25):
Thank you so much. Miguel Sosa, head of market research
and strategy. Over at Blue Rock, they've got about eighteen
billion dollars in assets under management. As you said, private
real estate and private credit are the two investment strategies
that they work with.
Speaker 5 (36:37):
In joining us there from San Diego, you are listening
and watching Bloomberg.
Speaker 1 (36:41):
This is the Bloomberg Business Week Podcast, a little on Apple, Spotify,
and anywhere else you get your podcast. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also want us live every weekday on you
to and always on the Bloomberg terminal. Mmahm
Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business
Wait inside from the reporters and editors who bring you
America's most trusted business magazine, plus global business, finance and
tech news. The Bloomberg Business Week podcast with Carol Messer
(00:23):
and Tim Stenebeck from Bloomberg Radio.
Speaker 2 (00:26):
I want to start with Disney because the company named
James Gorman chair of the board and said it will
appoint a new CEO in early twenty twenty six. For
where we're joined by Githa ranganathen Bloomberg Intelligence Technology and
a media analyst. She joins us from Bloomberg Intelligence headquarters
in Princeton. Geetha, we wanted to talk to you because
of what James Gorman said in his statement quote A
critical priority before us is to appoint a new CEO,
(00:49):
which we now expect to announce in early twenty twenty six.
We all know what happened last time Bob Eiger left,
and that's why Bob Eiger is back.
Speaker 3 (01:00):
Does this give you.
Speaker 2 (01:00):
Any indication as to who will be CEO and what
their priorities will be?
Speaker 4 (01:06):
Well, Tim, no indication yet as to who would be
the CEO. I mean of course, the one thing that
it definitely does address is that succession planning continues to
be the number one priority, both for investors and obviously
for the company alike.
Speaker 5 (01:22):
So that's good news.
Speaker 4 (01:23):
They obviously have a very very capable executive now running
the whole process, James Gorman, who himself kind of orchestrated
this really smooth transition, you know, in his own role
to Ted Pick. So obviously you have a very capable individual.
But you know, this Disney's experience with succession planning really
has been so botched, you know, and it's just been
(01:45):
so so messy. It's been dragging out so long. I mean,
it's the perfect business case example of what not to do.
So it's going to be interesting. I mean, we do have,
you know, many internal candidates, but they have said that
they're going to look both internally and externally, so I
think and everybody's fair game at this point.
Speaker 6 (02:01):
Yeah, it's pretty remarkable when I feel like it was,
you know, kind of Game of Thrones being extreme between
Tom's Daggs, you know, but they were like grooming to
right and they switched their jobs, and like it just
seems so logical, and they were planning can I ask
you something, why is it taking so long to find
a successor? And this isn't meant to diss Bob a
(02:23):
you're coming back, but why did he come back?
Speaker 4 (02:27):
I mean he came back because obviously of that whole
botched succession that he kind of engineered with Bob Chapik.
I mean, one thing that we do have to remember is, yes,
as much as we criticize Bob Iger for, you know,
all of these failed succession attempts, you don't have to
remember that running Disney is really really difficult. Running Disney
is very much like running a country. Right You have
(02:48):
very very different disparate divisions here. The parks as its
whole is just its whole animal on its own. Then
of course you have the TV networks, you have studios,
now you have a streaming product. So but there are
so many different elements to this and it's really very
hard to kind of find one executive who can handle
it all. So right now they have all the four
(03:10):
section chiefs. You know, you have the ESPN chief Jimmy Petro,
you have Data Walden and Alan Bergman from the TV
and the studio side, and then of course you have
Josh Tomorrow who runs the parks. The word is that
the front runners among the internal candidates are Dana Walden
from the creative perspective and Josh Tomorrow from the park
parks perspective, you know, just obviously because that's such a
(03:31):
critical element of the whole business. But what they found with,
you know, putting a parks person in charge was that
all of the creative relationships were completely destroyed and we
ran into a really rough pattern the studio side because
of all those missteps from Bob Japek. They are right
now thanks to you know, Bob Iger kind of being
back at the helm kind of fixing that a one
(03:53):
film at a time. But it has been a long
and painful process, and so it's going to be really
interesting because whom they name a successor is kind of
going to be really important in dictating, I think the
future strategy of the company. Is it going to be
is it going to continue to be parks or is
it going to be more a Hollywood type of person,
you know, with that kind of creative element there.
Speaker 5 (04:14):
Well, and we are actually, excuse me, maybe Mini Mouse.
Speaker 6 (04:21):
All I know is the creative and you know this
well that they're so they have been so good at
taking creative and then spreading around kind of the Disney
universe and making money off of it. So we shall
see KEITHA. Thank you so much, always always KEITHA ringingoth On.
She's technology and media analyst at Bloomberg Intelligence out there
at BI headquarters in Princeton, New Jersey.
Speaker 1 (04:41):
You're listening to the Bloomberg Business Week podcast. Catch us
Live weekday afternoons from two to five pm Eastern. Listen
on Apple car Play and then brout Auto with a
Bloomberg Business app, or want us Live on YouTube.
Speaker 5 (04:55):
So we talk a lot about insurance lately.
Speaker 6 (04:58):
Often involves the cost of back to back hurricanes, the
skyrocketing cost of home insurance, just generally. Even reading in
this morning, there's this story in the New York Times
that talked about motor vehicle insurance premiums rising more than
fifty percent in just the last three years.
Speaker 3 (05:13):
That dad sent that to my whole family.
Speaker 6 (05:15):
Right, I mean they were talking about twenty thousand dollars
for a family that obviously had some kids who just
started driving. But that fifty percent rise in the last
three years, that's according to CPI data. We all have
lots of reporting here at Bloomberg on that and some
thoughts on that as well. Right now we're tapping into
the insurance world, but not the area that's gotten all
that attention as of late. Instead, we're looking at life insurance,
(05:37):
something that many Americans have or consider having. So let's
get to our interview with us right now. As the chairman,
president and CEO of Mass Mutual, they do provide financial
products such as life insurance, disability income insurance, long term
care insurance, and also annuities. Roger Crandell is the head
of the company. He joins us from Mass Mutual headquarters
in Springfield, Massachusetts. Roger, great to have you here on
(05:58):
Bloomberg Business Week.
Speaker 7 (05:59):
How are you.
Speaker 8 (06:00):
I'm great, Thank you, good afternoon. Thanks for having me.
Speaker 6 (06:02):
Yeah, great to have you here. A lot we want
to get to. I have to ask you, and I
know it's not your world, but our lead up our
intro into you, because you're someone who understands the insurance
space more broadly, some of the trends. I got to ask,
why has it that so many different areas of insurance
have gotten so expensive? What do you hear from different
you know, peers in the industry, about what's going on,
(06:25):
and I understand climate change and storms, but is there
something more going on?
Speaker 8 (06:29):
Well, yeah, I mean I think it starts with something
that's on all of our policyholders' minds when we talk
to them about their financial plans, and that's just the
level of prices and inflation over the last several years.
So you know, you have a damage to an automobile,
damage to a home, it just costs more to fix it.
So that is clearly part of what's what's happened. You
had all the supply change, disruption of COVID was part
(06:51):
of that. Obviously, You've also had this situation when interest
rates collapsed. Insures, property and casually insurance in particular, mostly
short term bonds, really saw their income fall. It's only
now started to go back up as the FED has
been kind of raising, right, So a little bit of
a perfect storm climate change, storms, high costs to replace,
(07:12):
and then kind of damage on the capital side from
interest rate changes as well. So we are not in
that business, as you said, We're in the life insurance business.
And luckily people are living longer every day, so life
insurance has actually gotten more affordable over the last five
to ten years. So no reason for everybody not to
have adequate coverage for their loved ones.
Speaker 2 (07:33):
Does everyone need adequate coverage though, And the reason I
asked this is because life insurance really didn't get on
my radar until I had dependents. And we hear a
lot about people not having as many kids, Americans not
having kids, are waiting longer to have kids. If people
don't have kids, do they need life insurance?
Speaker 3 (07:52):
Yeah?
Speaker 8 (07:53):
Well, you know, I think everybody has people in their
lives that matter, or causes or philanthropy in their lives
that matters. So I don't know a single family who
has a life insurance policy pay that isn't happy to
have at a time of real emotional stress, some financial
stress kind of taken off their shoulders. So I think
everybody should be thinking about it. It's also one of
(08:15):
the only things that the longer you wait with certainly
I can tell you, the more it will cost. Because
the best time to buy life insurance is when you're
young and healthy. If you wait to year older, it
gets more expensive, and if, unfortunately, if you get very ill,
it can become actually on a table at all. So
I think everybody should think about having some coverage and
you can buy a policy that can be converted into
(08:36):
a permanent policy, which is particularly effective for folks for
longer term kind of objectives. So, you know, there are
a hundred million Americans who either think they need more
life insurance or who don't have insurance, and they all
tell us one way or another they would like to
get covered. So it's up to us to make it
easier for them to do that and make sure that
they've got financial professionals to talk to that can help them.
Speaker 2 (08:56):
One thing that was interesting in my process of buying
this what you know seven six, seven years ago, Carol,
is that there's gender differences too. So my wife and
I are pretty much the same age. There's a month
difference from our birthdays, but her policy is less expensive
than my policy.
Speaker 5 (09:10):
That's because we're stronger and better and I'm going to
live longer. That's just how it true.
Speaker 6 (09:13):
Is that I'm just going to put it out there.
What's your advice to somebody? Right, Like, good companies they
offer provide life insurance for their employees. You might have
to pay a little bit into it. The difference between
going that route and then just going on your own
from the get go.
Speaker 8 (09:29):
Yeah, well, think, Look, I think for those of us
that are fortunate enough to work for companies like Bloomberg
and like Master Mutual that do offer that, absolutely, I
think people should be taking advantage of it to the workplace.
But frequently, you know, you may want to consider having
more or different types of coverage. You mentioned disability income
insurance kind of in the intro. I think that's an
(09:50):
under a very much underappreciated type of coverage. For most
younger folks. The biggest asset they have is their ability
to keep working. So that's an example one where some
additional coverage could make sense. But I think it really
needs to be customized for everybody's everybody's experience. And one
of my one of the gifts that I give I've
got a step daughter a step son. Rather getting married,
(10:14):
I gave both the endos fiance a mass mutual policy
as their engagement gift. Guess what a young woman gets more.
Young woman gets more coverage for the same dollars as
the young man because women doing fact livelong or our
oldest policy holders today is a woman. She's one hundred
and two and she's had her policy for ninety one years.
So it's kind of a remarkable how long term insurance
can be.
Speaker 6 (10:34):
Yeah, I'm just going to say, like, who needs another
piece of silver that you have to polish? I would
take the life insurance policy. Having said that, I do
want to put out just full disclosure that Bloomberg does
work with you guys mass Mutual in terms of offering
up employees different benefits that you guys provide. So I
just want to put that out full transparency. Tim, I
know you have another question.
Speaker 2 (10:53):
Yeah, Roger, is there a better way to do this?
Is there a better way to understand risk using technology
and AI? I mean, when I got my policy six
seven years ago, somebody showed up to my apartment, took
my blood, did my blood pressure. But you know that
doesn't really create an accurate risk profile of what I
do day to day versus what you know, the other
(11:15):
forty something does.
Speaker 3 (11:16):
Day to day.
Speaker 2 (11:17):
Isn't there a better way to use tech in AI
to figure out these actuarial tables?
Speaker 9 (11:23):
Well?
Speaker 8 (11:23):
I mean I think the answer is maybe. So Certainly
we can do things like be able to look at
electronic health records more quickly to be able to assess risk,
because what we're trying to do is offer everybody the
lowest possible cost of insurance. And that's the difference between
buying an individual policy from a company like Mass Mutual
versus what you get at work. At work, by definition,
you've got to spread the risk over the entire insured
(11:45):
kind of population, and that works really well on average,
but for certain individuals you may actually be able to
get lower cost coverage by being underwritten yourself. So we
are trying very hard to figure out how we can
do things that are less than based than having somebody
come and take blood and other bodily fluids. That is
still a very good way to to assess risk. But
(12:09):
AI is starting to change things, maybe not as much
in the underwriting. It's doing some there, of course, it's
really going to ultimately change how the business works on
the day to day business. Our business is no different
than any others with jen AI really beginning to make differences.
Speaker 5 (12:23):
Hey, Roger, a couple things in the nitty gritty of
your business. I want to ask you.
Speaker 6 (12:26):
You guys are a notable player in the pension risk
transfer market. So basically, an insurer takes on a company's
pension assets and liabilities.
Speaker 5 (12:35):
What's the outlook for these sales?
Speaker 8 (12:37):
Yeah, you know, so at the end of the day,
most companies that still have a defined benefit pension plan
and most of them are closed to new folks entering.
It's not their core competency, right, It's our core competency
to manage investment risk and mortality risks. So it really
makes a lot of sense furniture like Mass Mutual to
carry that risk as opposed to an operating business that's
(13:00):
really thinking about how to win and compete in their
market kind of every day. So we see the market
is going to continue to grow, you know, the fact
that equity markets have done well and interest rates have
stabilized to have left the funding status of plans generally
in better shape. So we expect that there's going to
be a fair amount of this business over the years ahead.
(13:21):
And again, fundamentally, this is what we do every day,
So we're a very good holder of that type of
risk compared to the typical corporation that has to think
about all their other things and not have to think
about things like life expectancye matching durations of assets and
liabilities and risk of their bond portfolios.
Speaker 6 (13:37):
All right, but I also am I want to kind
of as a follow your own portfolio to make sure
you guys meet all of these liabilities. You guys play
in the private debt market. It's something we talk about
all the time here at Bloomberg. How have those investments performed?
What can you tell us about that?
Speaker 8 (13:55):
Yeah, I mean those investments have performed wonderfully for a
long period of time. I actually started at Mass Mutual
in a training program in nineteen eighty eight doing private lending,
first in the commercial mortgage business and then in what
we used to call private placements now you would call
private credit. The key is you have to match the
duration of your assets and liabilities. And if you have
long term liabilities like pension risk transfer or like life insurance,
(14:20):
then you can afford to take ill liquidity risk and
get paid a premium. And fundamentally, what we do for
our policyholders over a very long period of time, and
we've paid the best given end in our industry for
eighteen years in a row, is we monetize that ill
liquidity premium for their benefit. So you just have to
really be careful that you understand your liquidity needs to
match your liabilities. Really tough for someone who has short
(14:41):
term liabilities to do that longer term kind of lending
or for someone like us with long term liabilities, it
really is a very nice match. So we have decades
of experience in the asset class and it's performed exceptionally
well over time, giving us higher returns and very low
losses because of the are you of collateral or covenants
in the case of a corporate deal.
Speaker 5 (15:03):
No worry that that's topping out.
Speaker 6 (15:04):
I mean it's more and more, you know, investors and
folks and traditional financial establishing establishment get into the private
credit market. No worry that some of those returns and
games that you guys have benefited from that maybe they're
topping out. And forgive me, just got about forty seconds.
Speaker 8 (15:19):
Sure, look, I worry for a living So yes, sure, market,
yeah exactly.
Speaker 3 (15:24):
But I would say I.
Speaker 8 (15:26):
Think if you stick to fundamentals and follow the cash flows,
there's still a tractive opportunities there. There are times when
there's more money coming in, there's time when there's money
moving out. But we're very comfortable with the opportunities we're
seeing in the quality of our portfolio.
Speaker 6 (15:39):
All right, goodlie with there, great look forward to and
I hope you'll come back soon. Roger Crandall, Chairman PRESIDENCYEO
Mass Mutual joining us from their headquarters.
Speaker 2 (15:47):
Hey, attention to New England listeners. You can hear Bloomberg
Radio in and around Boston on ninety two nine FM.
It's your news source for business news from around the
financial center of New England. Bloomberg Radio ninety two nine
FM in Boston.
Speaker 6 (16:01):
Yeah, and Roger Grandall of course coming to us from Springfield, Massachusetts.
Speaker 3 (16:05):
Mutual Mass Mutual. See what they did there?
Speaker 7 (16:07):
You see what they did?
Speaker 5 (16:08):
You like how that works?
Speaker 1 (16:11):
You're listening to the Bloomberg Business Week podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and Android Auto with the Bloomberg Business App. You
can also listen live on Amazon Alexa from our flagship
New York station, Just Say Alexa playing Bloomberg eleven thirty. Well.
Speaker 2 (16:30):
You can find our next guest products in the dairy
section of your local supermarket LifeWay known for its kafir.
Speaker 3 (16:36):
You know it.
Speaker 2 (16:36):
It's like that yogurt like drink confikable yogurt movie.
Speaker 5 (16:40):
Oh okay, it's kind of yeah, drinkable. Got sorry.
Speaker 2 (16:44):
Maybe because you don't have critics, young critters.
Speaker 5 (16:47):
I have older critters older credit.
Speaker 2 (16:50):
It's a bubbly traded company about foydered million dollar market
cab but Julius and Lanski is the second generation of
her family to run the company after her father started
it and took it public a couple of years later
on the Nasdaq. Julia is chairman, president and CEO of LifeWay.
She joins us from Los Angeles.
Speaker 3 (17:06):
Julie, how are you welcome?
Speaker 1 (17:08):
Good?
Speaker 7 (17:09):
Thank you so much for having me.
Speaker 2 (17:10):
Yeah, thanks for joining us. You've got a really cool
story and the company is a really interesting one because
it's not often that you find publicly traded firms that
have such a narrow focus in terms of products. Give
us an idea of how business is right now and
where areas of growth are for you?
Speaker 7 (17:29):
Sure, well, it's an exciting time to be at LifeWay.
Speaker 10 (17:34):
Our category is the probiotic dairy functional food space and
we are seeing just a booming explosion of business. Just
the last nineteen quarters have been year over year consecutive
growth years for us, and that trend is not slowing
down anytime soon.
Speaker 2 (17:56):
Is that because of what's happening in terms of the
way people think.
Speaker 3 (18:00):
About products such as yours?
Speaker 2 (18:02):
Or are you doing things internally when it comes to
product development, when it comes to placement, distribution and the like.
What are you attributing that to.
Speaker 7 (18:11):
Yeah, I mean, I think it's both.
Speaker 10 (18:12):
I think, first of all, to just step back a
little bit, I think people really want to know where
their products are coming from, where the brands originate from.
And I think LifeWay is really the embodiment of the
American dream. It's just a remarkable story. As you mentioned,
my dad came from the We all came from the
former Soviet Union, and we were the first of forty
(18:35):
eight families that were settled in Chicago. And you know,
this idea of living the American dream was something my
father aspired to. And when he walked the grocery stores
in America, he noticed that there was no kiffir, which
was a staple product for two thousand years, for two
thousand years, something that my ancestors, my grandmother's passed down
(18:59):
generation to generation, and it was simply non existent in
the United States. And I think that, you know, and
so that's how LifeWay was started, and then he took
it public two years later. But I think consumers really
love that heritage story. They want to know that their
brand came from someplace authentic and real, not just out
(19:19):
of an AI private equity office or something like that.
And so I think that thirty eight years of legacy
that LifeWay has been bringing to American consumers and consumers
globally is part of the reason. Additionally, you know, with
this really wonderful, storied product, past of my ancestors, knowing
(19:41):
intuitively that kafir improved their well being, their health, they
attributed their centurion you know, living to one hundred years
of age based on their consumption of Keyfaer. And it
wasn't until nineteen oh eight when Ellie Mechnipoff, doctor Ellie Mechnikoff,
did the first round of science and research on kaffir
and probiotics and fermented daiies like Kiffer, and he found
(20:05):
that it did indeed help improve the body's health. And
today modern science is only just catching up on the
microbiome friendly bacteria, probiotics and kaffir specifically, and so there's
so much exciting medical research and we're LifeWay is a
brand that meets the moment. We are on every grocerysource
(20:25):
shelf across the United States, from Whole Foods and Ultra
premium markets to Walmart and Costco.
Speaker 2 (20:33):
Yeah, that's what I wanted to talk about because I
was talking to somebody recently who has.
Speaker 3 (20:39):
A startup ish food company.
Speaker 2 (20:41):
They've raised quite a bit of money and they're pretty prominent,
but she was telling me how difficult it is to
get shelf space at some of these prominent retailers. How
do you do it? As you know, you're not independent
in the sense of a startup.
Speaker 3 (20:52):
You're you're far from it.
Speaker 2 (20:53):
You're publicly traded company, but you're you know, you're not
danin by any means. You know, You're You're not like so,
so how do you do it? How do you compete
with the big players?
Speaker 10 (21:04):
Well, I think they compete with us. I think they
aspire to be relevant like LifeWay is. You know, we
have been very passionate and trend setting from day one,
and we still operate very nimble, and we are trend setting.
We aren't just following trends, but we're creating the trends.
(21:25):
We have been, you know, dedicated to putting a bottle
of LifeWay Keeper in everybody's hand, every consumer's hand, from
cradle to grave, generation to generation, and you know, building
trial showing up at culturally relevant events yoga. You know,
we were one of the first brands to partner with
(21:45):
yoga studios across the country. You can try our samples,
our products at Lallapalooza at Austin City Limits, all different,
you know, really amazing cultural moments that are relevant for consumers.
And the way that we show up to our consumers,
educating them on the importance of GOT health is one
(22:05):
of the reasons why we have had such tremendous success.
Speaker 6 (22:09):
So so okay, so really interesting story, family story. Publicly
held company, small market cap, about three hundred and ninety
million dollars. Stocks almost doubled year to date, Julia, I
am curious, so talk us through some of the metrics,
the type of growth that you're seeing, revenue, top line growth,
(22:30):
earnings growth, cash coming in. What do you do to
kind of keep growing the company?
Speaker 10 (22:37):
Yeah, I mean, you know, we have had the most
incredible historic quarters. The last five quarters were record breaking quarters.
Like I mentioned, nineteenth consecutive quarters of year over year
top line growth.
Speaker 7 (22:53):
We just hit our the second quarter this year, we.
Speaker 10 (22:57):
Almost hit fifty million dollars, which has been a number
we've had long circled in our aspirations up more than
twenty five percent.
Speaker 7 (23:07):
This year.
Speaker 10 (23:09):
Our twenty twenty nineteen revenue went from about ninety three
million to almost two hundred million right now two hundred
million run rates, So we've.
Speaker 7 (23:18):
Doubled our revenue.
Speaker 10 (23:20):
While I don't obsess about the share price at all,
I am very proud of the fact that in the
last five years our share price is up over almost
over twelve hundred percent. So you know, these are some
remarkable numbers. Our gross profit improved to a ninety two
percent increase. You know, our gross margin was up two
(23:42):
hundred and ninety basis points. So the metrics that prove that,
you know, consumers are looking for Lifewaykeeper. We are taking
market share away from other brands of other types of
functional beverages or other kind of old stale products like yogurt.
I think we're the more trendier, fashionable, healthier cousin of yogurt.
Speaker 6 (24:05):
Hey, one thing we wanted to ask you is you
know nifty function on the Bloomberg where you can look
at you know, your top shareholders and denote North America
has about what about a twenty twenty three twenty I
guess yeah. I reported that back in September and they
you guys confirmed a receipt of a proposal from Denote.
(24:27):
They offered twenty five dollars a share. You guys right
now change trade at twenty six dollars forty cents a share.
Speaker 5 (24:34):
Is there an offer?
Speaker 8 (24:35):
Is like?
Speaker 6 (24:36):
Is there is that the future that you ultimately will
maybe connect with this company, dnoone will own you? Or
is the plan to kind of keep going alone?
Speaker 10 (24:46):
Well, while I can't comment on that, I would like
to point to the incredible success that we're having at LifeWay.
We're on a really strong growth trajectory with a really
long runway and in terms of growing both our flagship
product of Kafir, but also an incredible exciting emerging category
which is not new for us, but new for the
American people, which is farmers cheese and farmer sheees. Is
(25:08):
so exciting because maybe you've noticed that last year, cottage
She's went viral on TikTok and it's all over everyone's
making blended cottage, She's in various recipes like that on
social media. And our farmer sheese is one of our
legacy products that we've been making for over thirty eight years.
It's something my grandmother's made. Like I mentioned footwog. In
(25:31):
my language, it's called buttwog. And Farmers Cheese is exploding
and we're really excited to be growing that category where
the largest manufacturer of farmers She's today and it's going
to be really exciting to scale that into all of
our locations where our Kifer is currently sold and bring
this new new category in the dairy space. You know, bioavailable,
(25:53):
high quality protein is something that consumers are really looking
for and they're craving, and that's something that Lifeboys really
has been pioneering and paving for a long time in
the natural food space, organic food space which is now
mass market.
Speaker 7 (26:09):
So that's a really exciting time for us.
Speaker 2 (26:11):
We only have about a minute left. But what's your
product pipeline look like expansion beyond Farmer Cheese and Keifer.
Speaker 10 (26:19):
Yeah, well, we are scaling our pro Bugs, which is
a pouched product for kids, Pouchkifer product for kids that
we innovated over ten years ago, and we've really invested
in some equipment and machinery to really scale that. You know,
we disrupted the entire baby food packaging space by launching
the first ever pouch in the United States for kids,
(26:42):
so we're excited to scale that into mass market right now, it's.
Speaker 7 (26:46):
A whole Foods nationwide.
Speaker 10 (26:47):
We also just announced the expansion of ten exciting new
trendy flavors lactose free. That's another big concern in the
dairy space. People are looking for lactose free products, which
Lifewai offers really exciting flavors like taro ube, macha, latte
h leachy, you know, really on trend, uh, snack able, easy,
(27:09):
instagrammable types of new products that we're exciting to scale.
Speaker 7 (27:13):
Excited to scale that nationwide as well.
Speaker 10 (27:16):
And and then we have just like a long long
trajectory of new products in the pipeline which I can't
discuss us yet, but look for more things connected to
skin gut access. We know that biotics work really well
on the skin or inside out, so some kind of
skins and friendly products brain Okay.
Speaker 6 (27:39):
Well, come back and tell us more when you cannot
give us some of the specifics, because that's super interesting.
Julie Smolanski, CEO at Lifewave Foods, joining us from La
Marco Journal about you let me.
Speaker 1 (27:57):
Drive alright, please, I'll do the gravels.
Speaker 6 (28:04):
Let's wait I want to try keep.
Speaker 8 (28:07):
It's a good question.
Speaker 3 (28:12):
This is the Drive to the Clothes.
Speaker 1 (28:17):
On Bloomberg Radio.
Speaker 6 (28:19):
All right, everybody, As you know, we're just about eighteen
minutes away from the closing bell here on Wall Street.
We talked about this with our John authors earlier that
Goldman Sachs is out saying that the S and P
five hundreds decade of big games is over. A Bloomberg
survey meantime shows participants believe stocks will keep rowling into
yur end, though the market is off to a slow
start this week.
Speaker 5 (28:40):
Come on, what I know?
Speaker 3 (28:42):
Slow start this week? I'm sorry.
Speaker 2 (28:45):
The S and B five hundreds of twenty two point
five percent so far this year.
Speaker 5 (28:50):
Last year, it's had quite a run. I know we needed, like, what.
Speaker 3 (28:54):
Are we supposed to do?
Speaker 5 (28:55):
Weekly run?
Speaker 3 (28:55):
What are investors supposed to do?
Speaker 5 (28:57):
What are they supposed to do? They're supposed to listen
to our drive to the guest? All right, so let's
get to it.
Speaker 6 (29:01):
Miguel So says, head of market research and strategy at
Blue Rock, joining us from San Diego, California. Miguel, good
to have you here on BLUEMBERG Business Week. We've got
Goldman Zach saying, you know, the S and P five
hundreds decade of big gains is over. There is also
another story on the Bloomberg about insiders selling, which is
(29:23):
never necessarily or is most times not seen as a
positive sentiment for gains in the equity market side of things. So,
how do you see it right now? This environment where
we've seen quite a run up in stocks.
Speaker 9 (29:36):
Sure, so it's been a different environment over the last
ten years versus where we are currently right in the
call it the previous decade, it was a low interest environment,
extremely favorable for equity investing. Now it's been for the
last two years or so of persistently higher interest rate environment,
(29:56):
which poses a potential headwind for equity investors. Nonetheless, as
was just mentioned, now we've seen twenty plus percent yearly
returns both this year and last year for the S
and P five hundred. So at the end of the day,
it's probably a more challenging environment for equity investing. But
(30:17):
who's to say the SMP can do what it wishes.
Speaker 2 (30:20):
It's through words i've never been spoken.
Speaker 3 (30:22):
S andp's gonna SMP hero S.
Speaker 5 (30:24):
And P's gonna S and P. Very funny.
Speaker 6 (30:27):
Having said that, investors, do you have to make decisions
and there's a lot coming at them, whether it's geopolitics,
whether it's the election outcome, whether it's I saw a
story that just crossed a little while ago, Neil Kashkari
maybe talking about the FED not needing.
Speaker 5 (30:42):
To be so aggressive.
Speaker 6 (30:44):
Let me guess, get it right here, because I want
to make sure I don't say it incorrectly. Fed's Neil
Kashkari see slower pace of cuts over the coming quarters,
Like we've seen a bit of a reset too about
maybe expectations about what the FED will do for the
rest of this year, maybe into twenty twenty five. So
as an investor, what do you tune out? What do
you tune into in terms of making investment bets.
Speaker 9 (31:08):
Yes, it's always challenging to certainly measure and predict where
the FED is going to be. If you recall back
to the beginning or the middle of this year, the
beginning of the summer, it was higher for longer. That
was a mantra, there wasn't any change to that tune.
And then come July August there was much more moderate
(31:30):
economic data, inflation, jobs reports, and that's when we started
to hear a pivot in the messaging towards reduction in rates.
We saw that come to fruition in September with a
fifty basis point cut, and now I don't want to
say another pivot, but certainly a new message of okay,
that was enough and let's moderate the interest rate production.
(31:53):
So at the end of day, I think investors are
seeing a robust and expanding economy, a healthy economy, and
much more moderate inflation, which over the long term, over
the medium term even we should see a gradual reduction
in interest rates. Whether it happens this year at the
beginning next year, it's going to be a slow process.
Speaker 3 (32:17):
So where's the opportunity then, I.
Speaker 6 (32:19):
When you guys have what some eighteen billion dollars in
acids under management, where are you putting investor money right now?
Speaker 9 (32:25):
That's correct, and in our view, we're focused on two areas.
One is private real estate. Private real estate has had
a really tough frunt in this higher interest rate environment,
but it's presenting some very attractive opportunities because valuations in
real estate are down about twenty percent, but occupancy rates
remain high. Net operating income has grown significantly over the
(32:49):
last five years, so investors receive more cash flow, but
at a discount because valuations are lower. And on top
of the fact that interest rates as they've moderated, cap
rates have moderated as well or cap rate increases. So
we're not seeing any headwinds to real estate investing in
valuation as we did over the last couple of years.
(33:09):
So when are We're starting to see a bottoming in
the decrease in real estate valuations there, which presents something
very attractive. We're also seeing attractive opportunities in alternative credit. Also,
given interest rates are higher, the tables have turned a
little bit more in favor of lenders instead of borrowers.
Speaker 6 (33:27):
So in terms of private real estate, we're specifically office
where are you finding the opportunities? And we've talked certainly
around this table over the last couple of weeks, whether
on surveillance, last week we had a great guest, David
Steinbach over at heind you know, talking about that as
deals get done, you get some transparency right on where
(33:47):
the pricing is in the market, right, you get some
clarity about that. But I am curious when you're talking
about private real estate, where are the opportunities for you guys.
Speaker 9 (33:58):
Yes, we're we're staying away from office. Office has faced
a challenging last several years, five years, and it will
continue to be challenged. In Blue Rocks view, we like
to think of it as under demolished, actually, because there's
still some pain to go through there. But in our view,
we like the industrial sector much more. There's persistent and
(34:20):
structural benefits within investing in that particular sector because more
of us continue to buy more products online and we've
wanted those products delivered to our homes faster than ever,
so that changes the demand for the warehouses that hold
those products. Those warehouses have to be closer to where
we live to get those products faster to our homes,
(34:42):
and so that's creating a very very persistent growth in
demand for industrial and specifically logistics warehouses and last mile facilities.
We also like the specialty sector. Specialty is really a
catch all term for everything that's not under the Big
four real estate. So you can think of specialties such
(35:03):
as single family rentals, data centers, life sciences, and these
are exciting subsectors because there's little to no correlation to
the overall economy. A simple example, think of data centers
we're all consuming data on our phones. We will continue
paying our phone bills and our internet bills regardless of
(35:24):
whether it's call it expansionary periods or recessionary periods. And
so it's become a part of who we are in
a necessity.
Speaker 6 (35:34):
Right, Hey, before you go, just get about thirty forty seconds.
I got to ask you, because private credit is your
other world. And again everybody seems to love a private
credit and we hear about it being kind of the
golden days of private credit. Pimco our Bloomberg Intelligence Credit
Edge podcast says had Pimco on a Pimco guests, as
private credit doesn't pay, as the hazards grow, are you
(35:56):
seeing any signs of an overheated private credit market? And
forgive me, there's just about twenty five thirty seconds left.
Speaker 9 (36:02):
Sure?
Speaker 1 (36:03):
Not really.
Speaker 9 (36:04):
We are seeing yields come down a little bit in
the private credit space, in the very small middle market loans,
in the area and the spectrum where we participate broadly
syndicated loans. There's still very healthy transactions, healthy yields there,
and so no no need for concern there or any
bubble in terms of private credit.
Speaker 5 (36:24):
All right, got to run, Hey, listen, Miguel.
Speaker 6 (36:25):
Thank you so much. Miguel Sosa, head of market research
and strategy. Over at Blue Rock, they've got about eighteen
billion dollars in assets under management. As you said, private
real estate and private credit are the two investment strategies
that they work with.
Speaker 5 (36:37):
In joining us there from San Diego, you are listening
and watching Bloomberg.
Speaker 1 (36:41):
This is the Bloomberg Business Week Podcast, a little on Apple, Spotify,
and anywhere else you get your podcast. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
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