How India’s Macro Tailwinds Are Fueling Its Aerospace & Defense Sectors | Andrei Stetsenko

the headlines you see about Indian Airlines placing the largest orders. They're airbus and Boeing jets. They used to do that. You'd hear that about Chinese Airlines and Middle East and Airlines. Map now it's Indian Airlines. As for defense, common thread between India and Europe where I've also allocated a fair bit of research time on the government ass, who can we turn to to help us be more sovereign with respect to missile defense, anti drone systems, avionics for fighter jets, eventually the whole fighter jet itself. These countries are not in position to start from scratch. They have come to realizations as to needing to have a more sovereign military industrial complex. And they won it on yesterday. And so it's very logical that the companies that will be beneficiaries are the ones that have been successful in delivering smaller scale versions of what the governments are seeking. Today's episode is brought to you by Fiscal AI, the fastest growing equity research platform on the internet. Later on, you'll hear more about Fiscal AI in the particular what it can do for professional investors. But for now, let's get into it. Today I'm joined by Andres Titsanku of Jim Kanna partners and investment partnership focused on India managed by Farley Capital. As the name suggests, Andres' business partner is my dad. In addition, my business and specifically my business partner consults for Jim Kanna. Andres, with that disclaimer out of the way, welcome to monetary matters, good to see you. For people who are not familiar with Jim Kanna, tell us about the partnership. What are you investing and what's your investment philosophy? - Sure, thanks for having me, Jack. - Jim Kanna has been around since 2017, but we've been investing in India for over a decade, started in 2013. And the opportunity we saw when we first went there over a decade ago was specifically in the underappreciated mispriced overlooked smaller-cap companies. So our median market cap and average and median are both below a billion US. And it's a really rich opportunity set in India. I mean, there's thousands of listed companies and a surprising number is down our high quality. It takes research to uncover them, but that's then our focus in Jim Kanna was our way of creating a separate product that specifically was able to target that opportunity. The results we've been pretty pleased with, we've found every single US dollar denominated in the mutual fund and ETF. We've outperformed the Sensex index, the MSCI index. And when I say outperformed, I mean, after everything. So the return our limited partners actually get is superior to the return you would have had from holding any of those India indices or India ETFs or mutual funds. - So what are you doing that the big cap fund, ones that basically the S&P 500 of India, the Sensex or the other big funds? What's the difference in portfolio between those two? - So there's only about 100 or 150 companies in India that are the kind of multi-billion dollar free flow market caps that are sizeable enough for a product like the end MSCI India ETF to really trade in and out of. And so they're really constrained to a pretty small sliver of the overall universe. The companies we own are completely different. I mean, there's no shortage of companies that are very high quality and large, but everybody already knows that in India, like HDFC bank is probably the prime example where every major foreign investor in India that is above a certain size kind of has to own it. It is the best run bank that most respected. And what we have the benefit of doing is we can move the needle with investments in smaller companies that are, you know, they're kind of the blue chips of tomorrow that we're trying to own today. - So in terms of the size differential, the average company is way smaller than the Sensex. What about valuation? - Yeah, so valuation-wise, our forward PE weighted by position is about 15 times. It's way over 20 for any of the indices for a company like HDFC bank, it's typically even higher. And I'd say that the other big differences that our research leads us to assemble a portfolio that looks sectorally pretty different from the indices. It's not like we're deliberately seeking out investments in certain sectors, but we do tend to avoid sectors that are represented by pretty large companies in India, like utilities and telecoms, you know, that the Sensex is over 10% telecoms, we're zero in telecoms. And that's mostly because, you know, we wanna be invested in companies that have competitive advantages related to how they're run and the businesses they're in, not so much the licenses they have from certain parts of the government where we never wanna wake up the day after an election and feel like our portfolio has suffered politically. - And so Andrade, so the big indices, MSCI India, that the Sensex, like the S&P 500, they actually have a pretty high price to earnings ratio. You know, unlike a lot of other emerging markets, what do you think of the high price to earnings ratio of India? Does it deserve it, you know, relative to the other emerging market sort of children in the EM family? - It's my only way of investing in India was holding the Sensex or the MSCI India Index. I'd still think that was a pretty interesting opportunity just because those articles, the India bears that like to talk about the high PE of the indices, don't mention is that it's also the only market, only major equity market in the world that gives the US a run for its money in terms of underlying earnings growth. The growth is ultimately what is gonna drive long term equity return. So it makes sense that the multiples are a bit higher than they are in a slower growth market. - And what is it about the Indian economy, market structure, society, where the earnings are growing? Because a country like China, the economic growth has been absolutely tremendous and super successful in that in terms of GDP going up. In terms of earnings going up, it's been a very, very different story. - Sure. - And you're similar with Europe, earnings have not grown that much and Europe has not grown that much. Overall, what is it about India where the GDP is growing and earnings are growing as well? - Yeah, so first of all, the GDP growth is faster than any of those other places is the fastest-firing major economy. And the one lesson that's really been reinforced over and over with each visit I pay to India is that the above a certain rate of GDP growth, when GDP growth is, you know, 6% is a bad year in India. When you're consistently growing that fast year after year, the whole structure of the economy is different from what we're used to. I mean, there are sectors in the Indian economy, especially sectors that are catering to, you know, the rapidly expanding middle class that are growing 30, 40% year on year. And when the market's expanding that quickly, you just don't get the same dynamics that you do in a slow growth market where kind of there's already incumbents that dominate every niche of the economy. There's a lot more opportunity for disruption and change and for new brands and new businesses to take hold. That's one of the reasons that the equity earnings, I mean, if you look at a chart of the fastest GDP growth by country and also a chart of the fastest equity earnings growth by country, in India is the example. Kind of if you rank it either way, India comes out looking really good. The equity earnings growth actually matches the GDP growth there. And another reason is that it's, you know, it's not a perfect economy. There's problems in terms of, you know, some sectors are over-regulated, some are too oligopolistic. That's true, I just bet any large economy. But I'd say that your typical market in India for your typical product, whether it's consumer goods, financial services is pretty competitive, pretty dynamic and it allows well-managed companies to rise above the rest. - I know your over-allocated way over-allocated relative to the MSCI or CINSEX is the chemicals and also the industrials, agriculture as well. Why is that? - There's a number of businesses just to tie this into what we're just talking about as really rapid market growth where, you know, the overall economy is growing 6% or 7% or 8% in a good year. The markets that some of our companies are addressing are growing much faster because basically the addressable market, whether it's farmers buying agricultural seeds or it's young urbanites making their first investment on a mutual fund through a financial services provider. It's businesses that are addressing needs in the economy that are growing much faster than the overall growth even in disposable incomes. It's happening because their customers are becoming customers of that kind of business for the very first time. So the growth is just on a different level and you know, it can continue year after year because people are continuing to move into cities, continuing to get their first formal employment. The kinds of trends that you saw in China maybe two decades ago or even longer ago in terms of urbanization just starting to get going. You know, India's majorities of India is still rural. A lot of the trends that powered China's growth when back when the Chinese equity returns did match GDP growth, those trends are just getting started in India. I'd say another thing that is pretty important in India apart from the fact that the business community there also typically speaks English is just that SEBI, their SEC, is a high quality institution. It's not to say never makes mistakes but the rules are strict, the disclosure rules and I'd say that if you have bad corporate governance it eventually gets penalized. - Yeah, it's certainly in the States where you know, not nothing's perfect for sure. - So, in those industries, chemicals and agriculture? - Yeah, I'd say that with chemicals, you have a multi-pronged opportunity. You have many products where India's currently import dependent and even if you just look at the shipping costs, it's economical for an upstart in India to start producing it. Even if it costs slightly more to produce it then it would then say China or Thailand. They can make up for it by offering reduced shipping costs to the customer and India itself is such a big market that you don't need to rely on export demand. You don't need to be a Korean chemicals company that has exhausted its domestic markets so now needs to exploit export opportunities. There's so much opportunity domestically that a company can prosper just based on that and on top of that, once you get a handle on that domestic opportunity because Indian companies are so cost competitive in large part because of labor. And when I say labor, people tend to think low cost but I'm also talking about very cost competitive higher skill talent, engineering talent which India also has an abundance. The export opportunity for many of these companies is also that's another story that's just getting started. - And so people think of China, I just had on Michael Pettis and he's really focused on how China's internal demand is very weak relative to its economy. Obviously, it's huge and it's a very big number but relative to its giant economy, it's weak. In India, that's not the case, right? There is a large consumer market. - Yeah, it's a large consumer market. It's like in the US, the bulk of GDP is attributable to consumer demand and there's just not the kind of financial repression you see in China which they've done obviously for their own reasons but one of the results has been as we're now all seeing that it's just kind of stuck in a permanent deflation and they have to export this massive surplus that's gotten so large that it's now really overwhelmed the rest of the world where when you invest in India, that's one of the things that I've been counseling perspective investors when they get worried about stuff like the trade war and the Trump tariffs is that stuff matters certainly to certain industries to certain companies in India but at the end of the day it's a story about the relentless grace and domestic demand for just about everything. It's like the US. It's an economy that has trade where trade is important but it's not the end all and be all of your typical company. - A lot of allocators think of emerging markets and they throw everything in one basket and I think for a lot of countries over the past 15 years have been disappointments. China, Brazil, South Africa, Russia, others as well. How is India not going to fall into that? What traps have emerging market investors fall into in those countries anymore? And how are you thinking about why India's different? - You can never act like politics don't exist and certainly investors in a place like Russia committed that error. I'd say that's also been true of the other countries you named to a less extreme extent at least but in India, we, Steve and I, we first traveled there right before Modi was elected for the first time in 2014. And even then we saw the opportunity and I'd say that even in the absence of a Modi-type figure, it would still be a remarkably interesting opportunity but the presence of a reformist government that again, like everything else, everything has its flaws, even the good things but in terms of how the policies of the government have impacted the private sector, it's been a tremendous bonus and a tremendous tailwind on top of all the other tailwinds for the past decade to have a government that is aware of the costs and benefits of policies that make it easier or less easy for businesses to function. - And what policies have those been for Modi? - One of the big ones is just reducing the complexity of regulation, you know, it's simplistic obviously to just say that regulation is bad, deregulation is good. The way they've deregulated has been smart in that they've taken away, taken out of the system some of the kind of complexity for complexity's sake that was introduced pre-91 in India. On my blog I talk a lot about just what a step change it was in India after '91 where a lot of rules that maybe their intent had been different but the result had been that they were disincentivizing the growth of businesses be out of certain point. You see this in Europe now too where I think it's I forget the exact number in France but I think above 100 employees you have a much more complex regulatory burden so they have just a completely unnatural number of companies with 99 employees. - You had a similar story in India where in an effort to protect smaller businesses they made it impossible to grow large and so a lot of those regulations are the kinds that have been dismantled. There's just an effort to simplify the day-to-day of owning and growing a business and it's been beneficial for the employees of those businesses and of course their customers too. - So you said Steve that's my dad. I remember my dad telling me probably a decade ago about Ohandre's been doing a lot of work on demonetization. - Oh right. - Lane what that is and now that we're many years past it what the impact has been. You can't really talk about that without also tying it into GST which picture India before GST was kind of like the U.S. before the Interstate Commerce Act. You know there were tax collectors or I guess you could call them interstate tariff collectors at every state border. You couldn't really have a centralized distribution system if you were trying to build a pan-India business. You had to have a business in each individual state and it was a patchwork and the point of demonetization again not a perfect policy probably might have been a more less disruptive way to do that specific, implement that specific change which was designed to capture some of the Indians called black money. You know it lists it on tax money in the system but I'd say the long-term result of all the combination of policies that have been pursued is specifically and most importantly GST has been very beneficial where it used to be that many of the listed companies are the kinds we own. They'd face a lot of competition from smaller competitors whose big advantage was that they weren't tax payers and you've taken that option or you haven't taken it away but you've made it a lot more difficult where the wage GST has structured. There's built-in incentives to be part of the tax net so that if you are a tax compliant buyer of products, the suppliers from which you source inputs, they also need to be tax compliant and so on. And so that's been beneficial. It's also been beneficial for equities as a whole where it used to be that the big advantage of gold in real estate was that you could, you know, it was a way to stash untaxed money pretty easily. And now it's much harder to kind of money launders actually and they're subject to the same rules that financial securities have been subject to forever and it's been a big benefit both to the financial markets but also to the country. I mean, because a lot of investment that used to flow into unproductive assets is now flowing into helping growing companies grow more. - I think a lot of countries around the world that are not the US, I think a lot of wealthy people who have excess savings put it in real estate or into the US market. I don't know my individual cases but just looking at the total flows. I think like $700 billion like floated into the US like this year or something. But, you know, India is that slightly less the case where because the equity market is exists is large liquid that they're investing, you know, okay, sure they'll invest in the S&P and other things but they invest in the home grown markets. Well, whereas China, it like astounds me how little the Chinese population is investing in the Chinese market. - Yeah, despite capital controls that make it hard to invest elsewhere. Yeah, so there are capital controls in India for individuals that, you know, for your typical middle class person, the limits are way above what they would be able to invest abroad anyway. So it really is a, what will you describe really is happening where people have made a conscious decision to put a greater share of their savings in the shares of listed businesses from their own country. And a lot of that has been driven by a 401k type law or account type, I guess you could call it a systematic investment plan SIP where you have payroll deduction funded automatic investments every month. They've been kind of this steadily rising tide in terms of how important they are to the Indian market. They didn't really budge even during COVID. It's been a pretty steady ascent. And at this point, it's something like $3 billion US per month or more. They've become a really important just undercrime stabilizing the market. And I think it's a key reason why a lot of the foreign investors who kind of instinctively started pulling their money out earlier this year are the first sign of weaker formats in India. Probably we're a little surprised when Indian markets didn't buckle. It used to be that foreigners really did drive the flows in India and that's just no longer the case. A lot of times, this is just how it happens at financial media. I'll be interviewing the gold guy when gold's at an all-time high or I'll interview an oil investor at the peak of oil prices in 2022. I'm actually glad that I'm speaking to you now 'cause India has been somewhat of a relative underperformer even though the send sex year to date up in rupee terms, the biggest ETF by far has not done that well underformed the S&P, underformed other emerging markets. What is the source of that? You referenced that foreign investors pulled their money a little bit, why? Even the foreigners are no longer the primary driver flows, they still are, it's still impactful what they decide to do and they've, there have been net outflows out of India by foreigners for most, if not all months year to date. It's not a constant massive correction, but it's, I think, limited the upside and probably driven a lot of the underperformance you mentioned. A big part of the driver of that, of course, would have been the trade tensions with the US this year. I think that anyone who has been selling India out of fears about tariffs or trade wars, they're kind of, they're missing the force for the trees where, you know, there are definitely companies and perhaps even sectors that will feel the pain of, especially the 50% tariff that's supposedly temporary and should be brought down to 25s of negotiations between the two governments that are supposedly ongoing. I think that will succeed, but even that 20% tariff, I think, is manageable for the economy as a whole, which is not trade dependent to anywhere near the degree that China is. You had a report on your blog, Dispatches from India, about this saying India is largely insulated from trade wars. Why do you say that? Well, it overall exports to the US are something like 2% of GDP. So it's basically a quarter's worth of GDP growth in a typical year in India. And of course, Barry was in that number. There's sectors that are a lot more impacted. I mean, textiles is one big casualty that I could name that's pretty obvious. But the biggest export champions in India, they tend to be in sectors like Pharma that are kind of, they're more high-skilled. They're typically exempt from the Trump tariffs. Number one, and number two, they do a lot of their exporting to places like Europe, other parts of Asia. A lot of Indian companies have big branches, big subsidiaries, and sub-Saharan Africa. There's a lot of diaspora links there. A lot of the agricultural companies that were invested in, they have big businesses in places like Latin America because their particular style of kind of a cost-effective product has done very well there. So part of the story is that India as a whole is not that export-dependent. Part of it is that where they are, major exporters, it's typically not utterly dependent on the US. Like so many investors, I definitely got, I panicked too much in April when we had that liberation day. With the benefit of hindsight, I now realize like the S&P 500's profits, the lion's share do not come from physical goods, exports. It's starting to end the like, which you're not impacted by tariffs. It's similar true of just the Indian markets. The thing to keep in mind about India is that the majority of the population doesn't even live in a city at their working agricultural jobs that are usually one-third or less as productive as even the quote-unquote worst job that they would get if they migrated to a city. So there's just this, the deep well of continued economic growth, productivity improvements, that is continuing regardless of what tariffs are. It's from really simple transformations repeated millions of times over on a massive scale of the population of India. People leaving a low productivity job, taking a better job, and suddenly having income to spend on things that are not there in necessities. That's the reason why the Indian economy kind of, it seems to stabilize at this fairly high growth rate even in a tough year for the world. I hope you're enjoying today's episode. For many investors, financial data from Bloomberg, Refinitive, Capital IQ, or FACSET is one of their biggest research expenses with individual seats costing upwards of $20,000 a year. Despite sky-high prices, these platforms have been dominant in the financial data industry. That's because many of the cheaper alternatives don't actually own their data. Instead, these cheaper alternatives are licensing from these big data providers with terms that forbid them, from allowing you the ability to download it. For professional investors, downloading and working with data in Excel is a must-have, and this is a major reason that the proverbial Bloomberg killer has been so elusive. All of that is changing with Fiscal AI's new enterprise tier. At less than $2,500 per year, Fiscal AI provides much of the same stock market data at one-tenth the cost of Bloomberg, and you can download it all because Fiscal actually owns their data. Instead of using huge workforces outside of the US to manually input data, Fiscal is using new AI technology to gather data directly from corporate filings, making it cheaper, faster, and more automatic than the labor-intensive incumbents. That's also why Fiscal AI's data is updated within minutes of corporate earnings releases. And before you ask, yes, Fiscal does have adjusted forward estimates too. But don't just take my word for it, start a free trial today, and use the link in the description to get 15% off any paid plan, including their enterprise tier for professional investors. Let's get back to today's episode. As we stand here in the middle of December looking forward to 2026, where do things stand between the US administration and India with regards to tariff? It is so hard to follow. But broadly speaking, like, is the 50% tariff even going to be implemented? The 50% has come into effect. So it is applied, but you're right that it's very unease in the application. There's huge swaths, very important swaths of Indian exporters that are exempt, electronics and pharma are completely exempt. So you're right, there's a lot I can say that's critical of the way the US has conducted trade policy globally and with India. And one issue, regardless of how you feel about whether tariffs are beneficial or not, is just the inconsistency and unpredictability. So it's very hard for companies to plan. And I'd say that another thing just speaking to my Indian friends is there. Definitely is a lot of confusion as to what it is exactly the US wants. There's it's kind of widely known if not maybe publicly spoken that the US administration basically demanded that India go along with something that wasn't true, which is that from broker to peace agreement with Pakistan. That's that's not an accurate description of what happened. And there's a sense in India that even though ostensibly the reason for the punitive additional 25% tariff is purchases of Russian oil, the real reason is kind of a bruised ego in the White House. So there's a lot going on in terms of the underlying drivers and what could be done diplomatically to heal the rift. But I am pretty confident that whether it takes another you know few weeks or a few months or even longer potentially that the the kinks will be ironed out because it's it's the most important I think diplomatic relationship in the world behind US China. You know are it's very it would be very bizarre for the two biggest democracies in the world. Both of which are concerned about China to not be working together. You mentioned defense. What drew you to the aerospace and defense sector in India and how is it different than Europe and US? The first thing you notice traveling around India a lot. And it's it's pretty sweet when you witness it is there's a lot of first-time flyers in the airports on the airplanes. You know people who are very excited when the plane takes off when the plane lands. It's a quintessential example of what I was referring to earlier where you know someone the per capita income going from you know $3,000 to $4,000 that that conceals a lot of momentous change that's happening on the human level where someone might be going from a job that pays them enough after their necessities to you know buy maybe a movie ticket suddenly they have enough money to spend to buy a plane ticket for the first time because the amount of income they have left over after paying for necessities that number is growing much more rapidly than their overall income that makes sense. The domestic aviation market is an example of something where demand is just exploding. India was the eighth largest aviation market a decade ago in the world and now it's third just behind the US and China and per capita flights are still a fraction of what they are and just about any other major market. It's less than.2 a year whereas in the rest of the world it's multiples of that. So that's on the civil aviation side. It's it's the what I just described all those powerful trends. That's what's driving the headlines you see about Indian Airlines placing the largest orders their Airbus and Boeing jets. It used to be that you'd hear that about Chinese Airlines and Middle East from Airlines. Now it's Indian Airlines. As for defense there's an interesting commonality between what you see in India now and what you see in Europe where obviously the European aerospace defense stocks have also been on a run and the geopolitical reasons for that in Europe are pretty obvious but in India what's happened is that they've seen what happened in 2020. There was a border scuffle with China. You saw everyone saw what happened earlier this year with Pakistan and Indians have also been paying very close attention to how the US has been treating its partners. And I think there's a growing awareness that regardless of how things go, I'm too sure that it would be it's a strategic necessity to have a sovereign and self-reliant defense industry. And so I think that the what we've heard over and over again from CEOs of defense aerospace companies in India is that the government gets it now that they understand that to cultivate the kind of defense industry they want they need profitable private companies to be able to invest in R&D and capacity expansion and it's just a it's a sea change from how things were a few years ago. I'm curious about the defense but just seeking with civil, so the Indian aerospace market and the airline market is in enormous secular growth. Okay, that is probably a sufficient but not a necessary condition for good returns because you have a good industry you know China has a huge secular growth but a couple of returns have been headed in very week. You know airlines as Warren Buffett said has historically been a very very tough business. Yep. Make the case for why you found them to be the durable compounders that have protective mode. We have not invested ever and Jim Connet in an airline I would be the world would have would have to change faith dramatically I think for us to ever consider that. The the investments we've made in the sector they've been some of the companies are like you said they're suppliers to the duopoly of Airbus and Boeing and the things they're supplying are usually pretty complex you know they require one of the reasons that the business has come to India is because India has this you know wealth of low cost labor but another big reason is the one I alluded to earlier where India also has an abundance of highly skilled engineering talent and so you can get an India a reliable and cost competitive supplier that nonetheless is delivering you a quality product that's comparable to what you used to be doing in a house it's the reason why it's not just Airbus it's not just Boeing but even you know European companies like DeSalt which has never produced before aircraft outside of France they are now in the early stages of planning to do just that in India. There's all these reasons that I just mentioned what India is a good candidate to be a multinational production hub but you also have a massive addressable domestic market where if you're Airbus and you are thinking about where to site where to give out contracts where to build your supplier base India makes sense for so many reasons and a key one is that if you're expecting a lot more orders from Indian Airlines it'll be helpful to have more of a base in the country. Tell me about these types of companies that you're investing in that are suppliers to do these airline companies you know give examples if you can. They're not typically suppliers to airlines themselves they're suppliers to either companies that make the plane that make plane parts or that are repairing planes so the MRO maintenance repair and overall not good that's a huge opportunity there's a company we own called Sika that active in that space there's another company we own called a Unimect that makes mission critical tools that are used in MRO applications but are also sold to notably to the makers of Arrow engines so Safer and GE Rolls-Royce you know it's kind of it's the most important machine approach in the plane itself and requires a lot of ongoing maintenance and so that's a great business because you kind of the whole business espairs and and extra parts you know the maintenance is is the business once you get in and once you're unapproved vendor you're you're locked in for decades and you're usually a very small part of the cost structure of the end product and so your customer is not nickel and diamond you if you put yourself in the shoes of an Airbus or a Boeing each one of those companies is producing a few dozen planes a month it both want to scale up production and both know that they have thousands of airplanes on order their order books are shilled up through the next basically a half decade or longer and so what they're trying to do is not just you know patch in some Indian supplier to take over some existing business that they're planning for great and so when they approve an Indian supplier they're counting on them to grow with them and to help be a reliable partner who's not presenting them with the issues who's not the reason that they have to cap production in a certain month getting forward when you visited some of these companies on last month in in November they're looking at a photo right now of a prototype for Dynamatics drone what did you observe yeah so dynamic is a is a fascinating company I remember I Steve Nurecht Nurecht is our India-based analyst the three of us we left that meeting feeling like this company was we're not sure exactly what it will look like and what the Indian aerospace industry will look like 20 years from now but we have high confidence that this company will be a part of that story where they're kind of at this point they have such a good reputation as a reliable and high quality supplier to just just about every one of those Western companies that I mentioned earlier Airbus Boeing included that they they have their their choice of the business they're they want to take you know that they when they build a plant it's just a question of which customer is going to be you know be taking the production off that line there's no shortage of potential business for them to tackle they just want to contract to supply it all the doors for all Airbus E220's I believe worldwide so there's just a massive opportunity to keep winning it could be a business like that that both scales them in terms of providing an additional Indian supplier base to match to Indian demand that Airbus and Boeing are now having to supply but it's also making them an export engine and tell us about Seika so Seika is another interesting company then we should also talk about defense because a lot of these companies are tied into both opportunities where Seika is there you have multiple businesses but the most interesting one the fastest growing one the driver of the company's overall growth is their MRO business it's a lot of overlapping providers from when you look at an aircraft whether it's a landing year the the seats especially we're talking about just non-economy the more complex seats those are typically complex machines and everything has its own complexities and you need this own specialized maintenance and so what Seika benefits from is this web of licensing authorized provider agreements with all the different companies that supply especially Airbus jets which today have been but most of their business so they should be able to grow at least in line with the rapid growth in Indian MRO where most Indian jets currently most of the maintenance work is done outside of India and so there's an opportunity not just from the rising air traffic in India but also from the kind of repatriation of that maintenance work as Indian companies gain the ability to handle more is what currently would be performed in the Middle Eastern Europe and so Seika had been on quite a heater year to date you've given back some of those gains but when you see a stock surge so much do you get a little bit nervous I'm looking at the trailing PE right now is 57 yeah how are you thinking about that I imagine it's probably one of the more expensive stocks in the portfolio Seika is also a very interesting example of I don't want to give away too much of the seat sauce but the the PE you see on Bloomberg or on the internet is not how we think of the valuation there's there's let's just say that there's something on the balance sheet that we think has tremendous value that's probably worth at least a chunk of the current market cap it's not the reason we're invested but we feel like it gives us an additional margin of safety when we think about PEs and yeah I'd say that we'd love to I'd say our median holding and interim conduct does not trade at that kind of multiple of trailing earnings and it would be incredible to be able to buy these businesses at 10 times earnings I think that sometimes with some growth opportunities and markets like defense and aerospace where I think we're where we're disagreeing with other investors where we're kind of the reason we have a different mindset from the people who are selling us shares in these companies is that we really we believe there's reason to have great confidence that the kind of growth we've seen in recent years will be sustained for a long time to come and that it'll it'll be really high quality growth you know a good example that comes to mind is a lot of the aerospace companies I met with they they might have had a multi-year relationship with say Airbus but not with Boeing or with GE but not with Safran and they would have been doing some small test level business with whichever one they were trying to get into and establish relationship with and so they basically would have a whole line of their business that's not really profitable it's just about getting into the vendor ecosystem of that potentially huge customer and as they scale up those relationships to be fully sledge commercial relationships the potential earnings growth should be there's a powerful driver yet to come it's what I guess what I'm trying to say for for many of these businesses where it's not like they'll struggle to continue growing up a similar rate they they might even accelerate and so Andre that the market cap in dollars of SEGA is just under a quarter billion after its meteoric rise tell us about in India are their IPOs that are very very small in market cap because you know in the US a lot of the time that a US stock is at 70 million dollar market cap is because it had a market cap of a billion dollars and it's a total loser of a company yeah whereas in India it's you know it seems like they're a smaller IPOs yeah so there are a much wider range of companies that you know you still get your big blockbuster IPOs but usually those are much more like the ones you see in the States it'll be a company that's you know soft bank or some huge private equity firm is offloading something that's kind of your quintessential US IPO where in the worst of those examples it's something that private equity just has to get rid of because of their own internal timeline in terms of the life of their funds it has nothing to do with kind of the quality of the business itself and you see much less of that adverse selection in India where the companies you know of course there's duds but many of the companies going public are you know incredibly exciting growth stories that really are it's kind of the the exact thing you would think of reading an economic textbook economics textbook as to why companies would do an IPO where they want to get on to that next stage of growth they need to fund their next big factory it's not about you know a current big shareholder just wanting to monetize the stake a mixed sense so on we talked about civil aviation tell us about defense yeah so with defense you see a thread a common thread between India and Europe where i've also allocated a fair bit of research time just looking at the companies that are poised to be the answer to their respective governments question when the government asks who can we turn to to help us be more sovereign with respect to missile defense anti drone systems you know avionics for fighter jets eventually the whole fighter jet itself you know these businesses these countries are not in position to start from scratch they they have come to realizations as to you know needing to have a more sovereign military industrial complex and they want it done yesterday and so it's very logical that the companies that will be beneficiaries are the ones that have been successful in delivering you know smaller scale versions of what the governments are seeking it's a multi-layered array of growth drivers for these companies you know you have the rise in the overall defense budget usually there's a big push to increase the share of those funds that's being allocated to equipment purchases rather than you know salaries and pensions in increasing these budgets they want to see surely more sovereignty ability with respect to specific systems that they'll be able to operate and deploy within the equipment budgets there's usually a push to allocated greater share of that to more nimble smaller companies that are able to you know deliver a working system in you know a couple years rather than in the typical you know almost decade long timelines that you see with some larger contractors where you know India has a version of what we have in our country where there's these incumbent titans of the defense industry like Lawtheed which you know they're they're indispensable to the structure of the market the way it exists but I think there are some voices in our country that are saying a lot of the same things I hear in India where they're saying you know well why can't we have a drone system or an anti drone system that doesn't take a decade to develop why can't we have something that's you know maybe a lower cost and not as invulnerable to every possible threat but we can produce thousands of them I imagine the people who are you know this is saying oh yeah we have the future of what weaponry you know buy from us basically I imagine they're focusing on drones like with with warfare right now you know what actually matters in the wars of today and tomorrow you know hopefully there are very very few of them and what is kind of a a an antiquity like you know I don't know maybe I don't know is it tanks that you know are something that the generals are still buying because they're 70 years old no one really needs to use them you know yeah so I'd say one thing that the Russia's war Ukraine has showed is that drones are way more critical than anyone's that tanks are a lot more vulnerable than anyone's that and one thing that you see in India as a reaction is that you know like you said there's inability to give up what they're used to so the army still relies for example on a large number of motorized vehicles that they get produced or import from Russia or produce in partnership with some Russian farmers and but that's now that used to be kind of the the MO of the entire Indian military that's now an exception so the Navy and the Air Force they they're really they're the ones that are driving both the indigenization that we're seeing where there's a push to make in India things that they used to rely on foreigners for but also on partnering with new partners so not Russia but rather Israel and France and the US also to you know both import technologies that the Russians can't offer but also to bring to India some of these technologies over time so India had been a significant buyer of Russian arms now that's declining and they're buying it from elsewhere and also trying to produce within the country so the I'm going to mess up the word the indigenization of Indian weapons tell us about that and what kind of economics could it could it create it used to be that India would for example in fighter jets would buy an entire Sukhoi jet from Russia and the Russians that's you know that's not just a commitment to buy the jets that's a commitment to buy servicing and maintenance parts from for decades you know it's it's a it's a big commitment what the Indians are trying to shift to so they're they're current big Carter at least with respect to fighter jets is France and to solve aviation specifically which produces the Rafale jet is there they've been happy or at least content today to to buy these jets made in France with French saffron engines but what they're increasingly moving towards as they gain half does a really significant export customer for assault just to say okay we want to the extent we're going to order another hundred plans for me we want a big chunk of that value to be created in India we want you to transfer us the ability to you know create at least for example the arrow engines you know to maybe one day start doing the wings and the flaps and you know it moving towards a future where eventually India will have its own capability to produce a stealth a jet cyber and what is it about the current state of of airplanes that they take so long to produce you know that it didn't take that long in 30 years ago or 70 years ago is it just that they're so complex is it the bureaucracy or is there some other reason it's all the above I mean that they're they're flying computers and so the software is tremendously important I think that the projects that have had the fewest complications have tended to be the ones where from the very beginning they were conceived as an adaptable platform so it was less about you know this fighter jet hardware is only compatible with this very specific software that has to integrate with the fighter's helmet and if there's one issue with any of it you can't swap it out those kinds of setups have led to problems whereas what customers increasingly are demanding across the world is something that is both deliverable faster and where there's just more flexibility in terms of swapping out components and vendors so I'll retell us about some other companies Jim Connors invested in in the aerospace world in India yeah so we talked briefly about dynamic we talked about Sika one other interesting category and an example of a company in that category would be DCX where it's when India decided that they wanted to indigenous their defense procurement kind of their their most their bluntest most obvious tool for doing that was to simply require a rising share of content to be sourced from Indian vendors and so it used to be 40 or 50 percent now it's a typical percentage for a contract from the Indian military is closer to 60 percent and that's been a big boon for companies like DCX where you know for example if you're Boeing or you're Lockheed and you want to sell F16s to India or or New York craft you can do that but for example the wiring the hooking up of all the electrical components that's a pretty labor intensive and a pretty important piece of the overall work that typically now gets done in India by a company like DCX and so it's you think that it would be a pretty straightforward business where under a lot of companies doing that if the government's basically giving them this market but reliability speed matters a huge amount you know these companies it only takes one accident one mishap to really damage the reputation of their products and so they are very reluctant to go with any vendor that is not that they have not spent years and years testing and evaluating and so the ones like DCX that have already gone through that process and won the approval of these foreign defense partners that India is cultivating they're in a great position to continue winning more and more business and you've written about how India is targeting a certain level of profitability for these providers right because if if the profit margin is zero it's going to be very hard to build things in India I should clarify that it's not like the government has gone out and said we want you know industrialists to be tremendously wealthy and have vacation houses it's more like it's more along the lines that there's a realization that there is no way to build this dynamic private sector defense ecosystem without allowing companies the level of profitability that will enable them to invest both in building new plants and in R&D the kind of R&D that'll allow India to be completely self-sufficient you know in a couple decades in terms of using the most advanced products and there is an increasing awareness both of that and of the necessity of working directly with some of these smaller nimbler private sector companies where India what I mentioned this earlier like the US has this kind of incumbent aristocracy of defense contractors and in India they happened to also be state controlled Barat dynamics Barat electronics and Hindustan aeronautics are the big three and you can imagine that there's a pretty cozy relationship between the government that's ordering the weapons the state controlled companies that are for decades have dominated the the production and delivery of those weapons and so it's been a really big deal to have broken through that very cozy relationship and that really has been happening with the Modi government especially within the past couple years I think there's been a really renewed sense of urgency from those two border conflicts I mentioned with with China and with Pakistan and with viewing the the performance of Russian equipment in Ukraine I think there's been in the defense establishment this kind of realization that it's not enough to just keep doing things the way things have been done and it's okay if the the new more efficient way of doing things if it's not exactly what that incumbent trio that's it's not what they want it doesn't matter we should be doing what's good for India and tell us about the level of severity of the conflicts between India and China and India and you know Pakistan I know you know as much as Mexico and the US might butt heads politically or US and Canada you know we're we're not worried that Mexico is going to be upset and really neither neither is vice versa but you know I know Indian Pakistan there's a very deep history there Indian China like is is there a real risk that China is going to you know encroach upon India or is it kind of just saber rattling all three countries are nuclear powers and so no one hopes for a war among any of those three and I don't think a big land war among the three is anyone's central probability scenario what the risks that India wants to be able to tackle is they want at the very least to be able to really effectively monitor their borders with these countries you have keep in mind that the border with the both countries especially China up in the Himalayas is very rugged terrain it's very mountainous and so the equipment that you need to accurately track anyone attempting to encroach on any little part of that has to be pretty sophisticated so a lot of the companies that we met with last month their suppliers of I guess you could you could catch all term for it would be electronic detection equipment just stuff that enables a better picture of the world and not not necessarily just the battlefield just just border control and yeah it's I'd say that with respect to Pakistan that that really is a great if you look at the the two countries GDP per capita it really is a great illustration of the power of liberalizing economics in a 1991 Pakistan had a higher per capita income than India and now India is just completely shot out of Pakistan's league and is able to spend nine times more on defense despite not spending more as a percentage of GDP with China of course it's a much bigger challenge China is able to outspend Indian defense and so that's where I think that Indian leaders look and say you know we have to be able to do stuff in a cost effective way and again that's another reason to turn to these nimble private sector players turning away from defense you know so Jim Connor Partners has a website and then you also have a blog dispatches from India you've been writing for for many years you recently had a write-up about Maharashtra scooters yep what is Maharashtra scooters what do they own and tell us about this sort of hold code dynamics for that company as well as other companies that you and my dad see as quite attractive to investors who can you know track that know what they're doing there's a number of reasons why these hold codes in India came about it say the the most typical the classic story back story to one of these would be that there was an industrialist of three generations ago who wanted to pass down his and it was all men back then who are to pass down his empire to to the next generation and in some in the cases you read about you know business disputes or conflicts and the newspaper it's usually about an industrialist who failed to do this and so there's a dispute at every generation that when it comes time for inheritance as to who which cousin gets what business and what's equitable with a hold code you get rid of that problem you basically just hand everyone shares in this one thing that's like a family trust and over the generations the biggest ones the most successful ones like Bajaj and Godraj they've become very valuable and very diversified and so Maharashtra scooters is the second biggest hold code in the Bajaj web of companies and Bajaj holdings we used to own until we discovered Maharashtra scooters and realized that both you know both hold codes are on collection of very high quality businesses but Maharashtra scooters allows us to own those that are even bigger discount so in the biggest India ETF Bajaj finance is I believe the ninth largest holding as let's say within the top 10 holding and you had owned that but now you own Maharashtra scooters which is a hold code which owns Bajaj finance I just mentioned but also Bajaj Finserv Bajaj auto Bajaj holding so it just owns those four things and that's all it does it's all it does yeah it's not you're not buying into like a John Malone type operator who's going to take your capital and suddenly reinvest it all into Formula One you know these are diversified businesses that are they're it's kind of like owning a passive investment vehicle at a huge discount to NAV where you know Maharashtra scooters trades at less than half of our calculation of NAV and the NAV isn't stuff that's cheap and directly because it deserves to be its its companies like Bajaj finance that you just mentioned which are leading fast growing businesses that are capitalizing on really powerful growth markets in India like financial services so if it's cheap now it must have been enormously cheap 10 years ago when we initiated our position in Maharashtra scooters it was definitely the multiple underlying earnings was closer to 10 than to 20 it's still pretty cheap I mean it the the the point of our investment there is not the exact and direct PE we're getting through the holding company it's the point of it is that we've identified a very high quality collection of businesses that we'd like to be shareholders in and we've identified a way to do so with a greater margin of safety so rather than buying the underlying businesses directly we buy this listed vehicle that owns shares in them that's trading at a discount so we effectively are paying a much lower PE than we would buying directly looking at the holdings of Jim Conn a lot of the very interesting cases are in the financial sector but why is Jim Conn's allocation to financials lower than in the sensex and msci part of it is that the some of the businesses that are easiest for foreigners to understand are ones like hdfc bank which we mentioned at the start of this conversation where let me check what the current PE is but it's historically been absolutely bonkers I remember at one time hdc bank traded at nine times book it's a very high quality business but and it's one of the reasons that the allocations of the index to financial services is so high is that the way they get exposure to financial services is through that kind of business that I won't call overvalued but I would say very fully valued and so they're paying very large multiples for a company that's not qualitatively any different from the financial services companies we own certainly not qualitatively better and the ones we own are we believe a much longer runway for rapid growth than these incumbents that already are dominant in in their slice of the financial world so you know an example would be one of our biggest holdings as a company called colamandal and financial holdings and so that trades at a big discount to NAV the biggest single piece of which is a company that also has the name colamandal and it's name colamandal and investment in finance and it's basically a financial supermarket that's especially dominant in southern india and some of the most prosperous parts of the country I remember meeting with management and just having leaving that meeting which with exactly the kind of feeling you want after meeting with a financial management which is they're they're not pursuing growth at any cost they understand that the point of a financial business isn't about lending out money it's about collecting money and they're very flexible with respect to the kinds of businesses they want to be in that's completely dependent on the market opportunity you know they're not trying to build an empire they're trying to grow earnings you said it's a financial superstar so I imagine they do everything but in what are they particularly strong and why are they you know what are their competitive advantages I should specify we don't own that stock directing we own it at a huge discount through an undervalued hold code okay so that's one part of our thesis another is that that hold co owns stuff that isn't just that one stock and so we're getting a diversified kind of mini portfolio within our portfolio of businesses that we're getting at an indirect much lower multiple than the headline pees and I'd say that why you know what's the rationale for someone who is choosing to pay that multiple directly I don't think that's irrational investment at all I'm very happy to have a way to get at it indirectly at a much lower pe but someone buying it directly is investing in an operator the colomandal group which is the umbrella for the family group that it's under as marigapah I'd say marigapah and godraj and bajaj are probably the top three names in terms of reputation of both management and ethics and india so that the companies that are part of those groups they usually trade out and deserve premiums and so under obviously you know if you can buy an apple for you know 20 cents instead of 30 cents it's a good decision to do it but when you're making these allocations I presume to a more illiquid hold code that you are basically getting a bargain what's your investment thesis you know there are a lot of investors who buy the undervalued closed-end funds and then short the basket that they own to harvest that premium you're not doing anything like that but you know do you have a thesis for convergence or is it just you like buying cheap things part of it is that given the option we'd rather buy an apple at the price everything else being equal it's just a bigger margin of safety but with with these stocks the listed hold codes in india there really are a bunch of catalyst emerging that you know it is not our thesis our thesis is not dependent on these discounts closing or even narrowing but there's ample reason to believe that they will continue to narrow as they started to over the past two years and I'd say the most important reason is that sebi the indian SEC has taken a very constructive position and a very active position that really shows that they're aware of these discounts and that they feel that the continuation of you know listed companies trading at 50 60 70 or even greater percent discounts to their nav is something that at the very least they should try to highlight to market participants and so there's been a bunch of moves to both do that and to make it easier to realize value in these structures and so these companies gained the ability as of a year or two ago to distribute without adverse tax consequences their shares and other listed companies to their shareholders and so if you're a hold co it suddenly is now possible where it wasn't before to dividend out again without adverse tax consequences to basically give your portfolio to your shareholders to remove yourself as an intermediary and I don't necessarily expect any one particular hold co to suddenly do that what wouldn't surprise me as if a set up like Bajaj where you have multiple hold coals if there were one day a headline about a simplification of that structure where instead of two we're going to have one and Maharashtra scooters would be perfectly positioned for that because its largest shareholder is another hold co so it would be incredibly excretive it would be a win-win for everyone for the shareholders and Maharashtra scooters to basically get effectively a premium to their current undervalued share price paid for by shares and the slightly less undervalued hold co that already owns Mr. Maharashtra scooters who is your competition in India on a big picture zoomed out level the competition is a lot orator in terms of just overall foreign interest in India where when we first when Steven I first went to India it was very common that we'd be the first foreigners visiting a listed company that still happens we're still very excited when that happens but it's become rare in part because the opportunities become more obvious to people and so now you have the Quebec pension fund it suddenly has a dedicated team doing in India investing which didn't used to be the case of course but within our niche that we've carved out of the smaller cap high quality businesses that we uncover based on intensive fundamental research I don't see a lot of competition there even to this day where I think we've built up I'd like to believe that we built up a mode just by having accumulated the research that we have accumulated where we are familiar with the reputations of just about any big name in India any medium-sized name in India in terms of ethics corporate governance what companies were they involved in before what do their customers and suppliers say about them we like to leave a little time at the end of every company meeting just a chat with manager is about what they think of this CEO what they think of that controlling shareholder and you add up enough scuttle but and you get a really really valuable database that we've compiled of something like 2000 companies where we've recorded basically every data point that could be impactful with respect to their reputation and how they conduct business and what the counterparties they deal with and the companies they compete with what they think of them and that's a very useful tool when it comes time to screen for corporate governance and it really helps and form what companies we try to meet with next so it it is more of that virtual cycle I was alluding to earlier where the work we've put in to date you know the I've been to India I think 18 times now that the work we've put in over the course of this decade plus of trips is immensely valuable and making sure that that each time we come back our time is spent even more optimally and productively I think that the results of our you know our really research intensive approach they've been born out in our performance where you can go to gymkhana partners.com and see every detail of our track record but we've outperformed the Sensex we've outperformed the MSCI India Index we've outperformed the comp set of over 50 India Mutual Funds and ETFs that we track and compare ourselves to and I think that it's that's not just luck at least at least a part of that is a replicable strategy that or a strategy that we the we've pursued that we want to continue replicating as as we invest for our next decade in India where if you put in the work if you do a lot of very fundamental research to screen the investments you make and then very importantly if you're a patient investor you can get a lot of long-term alpha in India where the the great thing about the Indian market among the many great things is that a lot of the people who are who you have the opportunity to sell stock to and buy shares from they're very short term-minded and so you are able to buy from people in a moment of panic where they're just ditching shares in a business that has a great long-term potential and by the same token during moments of euphoria we've been able to part with our shares to people who I wouldn't say they're necessarily overpaying but they're paying very exuberant multiples for businesses we are able to buy into that much lower multiples. So Andre what are some stocks or sectors within the Indian market that you are bearish on or see some challenges for you already mentioned like the telecom companies that are heavily reliant on government contracts and the like but what else? I'd say that there's a cycles in India where certain things are very hot and other things are deemed to be not sexy and so you're able to there's more opportunities to buy it at low multiples right now anything that's related to e-commerce you know fast delivery of goods to consumers is very hot and I wouldn't touch that with a 10-foot pole not only because it's very competitive and the multiples are very high but because that's an example of the kind of business where you have the most intense competition you could possibly imagine you know if you're if you're an e-commerce provider in India you're competing against a soft bank funded competitor competing against an Amazon that's very active in India they're investing billions of dollars there and you're competing against Flipkair which is Walmart so you have some of the most deep pocketed long-term minded competitors you could imagine but they're completely content to not get much of a return out of those businesses while they crushed their competition so that's something I would avoid and I would you know devote most of my attention to the sectors that we've continued to focus on which are the ones like industrial goods capital goods financial services agricultural products and services where they're serving they're serving demand that is really being created by economic development and by increasing prosperity you know they're they're cementing their position in markets that are expanding rapidly but also are where the competition is a lot more rational than it is in some of those hotter markets. And what about the IT outsourcing world? I know that that is a big big market. Yeah so that's over 10% of the Sensex is attributable to these companies like Infosys and Tecma-Hindra and the like and those companies that some of them might be decent businesses. The reason we've avoided them and I really can't see us being shareholders in them is first of all they're they're very well known to the type of big shareholder that we're differentiated from that you know they already sport multiples that I think are correspond to their underlying values and they're I'm not sure exactly how AI will play out for them but there's definitely a scenario in which they suffer because a lot of the work they currently have an advantage in doing due to India's low cost engineering talent that may not be such an advantage when those things can be automated and brought home and perhaps most importantly their customers their most important customers by far are in the US and to date services have not really been targeted by the tit-for-tat tariff wars really by anyone but one can imagine that suffering and there's kind of already been a shot across their bals with the US limits on H1B1's which they're the heaviest users up. Andra you mentioned AI you know obligatory got a got to ask you about it you and my dad not through Jim Connor but you know have have been paying attention to to definitely that sector in the United States. What do you make of the extraordinarily large investments being made by Google Microsoft Amazon meta in order to build these data centers a huge percentage of the cash is going to Nvidia as well as some other companies. Is it worth it? Is this going to be the dot-com bust over again or is this going to be great and the revenue is going to go to the sky? At the center of this AI boom you have a number of companies that are spending tremendous amounts of money of course open AI with these circular deals is a big concern I think justifiably for a lot of people the way the Farley Capital primarily most importantly is exposed to AI is through our investment in alphabet and alphabet I thought the the people who were bearish on that stock earlier this year were missing the force for the trees not much of overuse that expression but they really were aware there was this obsessive concern with well people going to switch from search to chat GPT and if you just observe the behavior of yourself and people you know unless here in incredibly unusual niche in terms of people who just are addicted to chat GPT I don't see anyone shifting their behavior in terms of discovery on the web in a way that's very commercially relevant so not when you're searching for information about a TV show but when you're searching for information about the kinds of you know a review of the seekers you're thinking about buying or and personal injury attorney that's Google's bread and butter and I think that's not going anywhere into the extent it does go the way of AI search it'll probably be straight into the Google funnel by a Gemini and all of the ways that they're perhaps belatedly but I think very effectively addressing demand for that kind of product and so I know there are several different like KPIs that alphabet Google Google tracks in terms of like impression or you know paid clicks and cost per click when you look at the fundamental drivers of the search business which you know is is the majority are you are you are you seeing positive are you seeing green shoots the great thing about alphabetism is that they have every piece of the funnel you know that they have the compute and Google Cloud so they're able they're they're not relying on an external vendor for the compute they have the actual index of essentially all the world's information and people forget but the world's second biggest search engine is also owned by alphabet it's YouTube they they also forget that anyone uploading video to YouTube is handing alphabet a perpetual right to that video and so they have they have control over the majority of video ever uploaded to the internet you know all these disparate things that Sergei and Larry did over a decade ago like buying YouTube Google Maps it all makes a lot more sense now have it all fits together and I think you're starting to see the payoff from that very long-term thinking where you know you you have an entity that has a map these massive massively adopted over a billion usually two billion plus user products like Gmail Google Maps and all of that data that was scooped up continues to be scooped up is now the reason why Gemini AI model even if it's whatever metric you want to track the quote-unquote worse than a competitor's model it ultimately won't matter if it's able to deliver more effective personalized useful services to people by using that integrated silo of data what do you think about open AI which is partially owned by Microsoft admittedly Microsoft you know bought it for a tiny fraction of what it's now supposedly worth my sense for what it's worth is that Microsoft is doing everything it can it's able to to kind of stuff the IP out of the entity which as you know has a bunch of legal complexity surrounding it and I think it made sense to for Satya Nadella to do what he had to do to avoid open AI and its team of very brilliant employees from slipping it into the control of a competitor but when you're Microsoft I think that that's that's kind of only one pair of your overarching AI strategy and the rest of it has to do with you know stuff like co-pilot and stuff that may be powered by open AI but it's not dependent on that partnership alone so people want to access your research will include a link to Maharashtra scooters piece as well as your upcoming piece on India defense and aerospace Andre where can people find you and find more of your work yeah so first of all I really encourage people to check out drinkana partners.com that's where you can find the blog that has the post that you just alluded to it's where you can find our latest materials just explaining kind of what what our strategy is and how it's performed you can find me on twitter/x you can find jimkana there at at jimkana fund and on LinkedIn and I can provide you with links to pass along because what I'm trying to do at least on x is to if not it's not tweet out all my thoughts day to day at least I'm trying to retweet you're very smart people so that hopefully should be an interesting follow all right where's my retweet I was doing those something interesting okay can't be related okay hey yeah so on on twitter you are a a step send a s t e t s e and Andre thank you for joining us thank you for walking I hope you enjoyed today's episode looking to learn more about fiscal AI check out the link in the description to get 15% off any paid plan including fiscal's enterprise tier which is designed specifically for professional investors who need access to downloadable data until next time