"As much as the infomercial that is CNBC wants to convince you that everything's great in the economy, it it's just clearly not. I can make a pretty strong argument that public companies will actually ..."

"That there's a nagging slowness or a lagging nagging underperformance to the economy in broad areas. They can't quite put their finger on it. uh because they look at CNBC and Bloomberg and they read t..."

"Um,, so, maybe, talk, about, this investigation that you've done recently about what's going less well and why and what you learned. Well, I'll start with you know, at Marblegate, we focus on the midd..."

"A good friend of mine uh ran a company called Rapid Ratings. Rapid Ratings does uh credit counterparty risk assessment for uh like the Fortune 500. So they'll assess the supply chains, the vendor rela..."

"When we looked at the data set over time we've seen a few like important characteristics the middle market IBIDA essentially deteriorates every year it just gets worse and worse and worse now we compa..."

"When we look at cash flow in those two areas, uh we see net profits after tax in the public market strong persistently growing. When we look in the middle market, we see that um that net profits after..."

"I, have, three, questions., You, can, take them however you want. One is who owns these things? Like who owns the equity in these things? >> Um, why, is, this, happening?, And, like, what does it mean..."

"In, fact, that's, the, exact, language, we use. And there's all this decline in Ebida, declining cash flow, interest burdens that are higher, scary sounding stuff like >> what, are, if, you, had, to, ..."

"What, do, you, think, it, means?, Like, what, is is this just an an inexorable trend that's going to keep going and the rich are going to keep getting richer? Uh we'll talk about the workouts and bank..."

"um that sort of feels like we're the world we're heading into. Uh there are other scenarios you could imagine that are more punctuated. Let me go back to what I said earlier about debt service coverag..."

">> Y >> uh, we're, also, interestingly, starting, to see some larger companies suffer that as well. >> So, you, know, it, goes, back, to, um, you, know as much as the infomercial that is CNBC uh wants..."

"Uh, you can do some sort of wholesale debt restructuring and get try to get through it quickly. That would be recasting a resolution trust company type idea. I don't know that there's even the beginni..."

"Now, look, back when I got into the business, credit agreements were tighter and so companies got themselves into tougher spots in a narrower range. So um the covenants were such that if your performa..."

"Yeah. The reality is that the data is pretty clear. In each and every year, there is some portion of the economy that is running at a two to three times the average default rate in the system. So that..."

"The most acute is of course the tariff risk. >> Yeah. >> Um, and, by, the, way,, we, have, some, data., We have some thoughts about what that might look like for companies. Uh but the indecision of ta..."

"Tariffs, our data looks at again across the middle market and then we look at the public market. We say what are the likely impacts and how does this work through the balance sheet and what would you ..."

"So um and so just say like a little bit more about Marblegate and how you prosecute things. Um because obviously like this style one might be really useful and important in this workout that you're ta..."

"Now, Paul and I had done a lot of business together over the years, and we liked focusing on the same types of businesses. We saw this middle market area as being, you know, wildly underinvested. As w..."

"So as the LBOs's got bigger uh a lot of the investors who had been built to invest in their problems similarly got bigger but that left an entire portion of the market just underinvested underprosecut..."

"We hear a lot about private credit and at Marblegate we talk a lot to private credit, think a lot about it and have a lot of views on it. Uh we think about the broadly syndicated market also. We think..."

"We also um built of course an analyst team. We have in-house financial restructuring. So today a lot of you know the folks that call themselves distressed investors again I I view them as buying cheap..."

"Now there are some great firms out there uh FTI, Alvarez Alex Partners that specialize in doing that. You know again particularly on behalf of the portfolio investors who are more traders in this spac..."

"C can you tell that story just as a representative example of the sort of thing that you do? My partner Paul came into my office and said, "I'm talking to a bank who wants to sell some um loans agains..."

"And uh the real problem, by the way, this is super interesting. There was this perception that they were taking riders away from from taxis. And that was not at all the case. The data was super clear...."

"They were getting uh brand new cars because all the drivers were going out and buying new cars. They were getting brand new black cars and subsidized service. New Yorkers, this is a deal. Yeah, I'll d..."

"It emerged over a hundred years and it employs literally thousands of people in New York City. It also is an important on-ramp uh to American commerce for the immigrant population. when I did my um my..."

"For, one, medallion. >> For, one, medallion., And, by, the, way, again, if you look back um and sort of look at it purely on a cash flow basis and where interest rates were and alternatives, it's not ..."

">> Crazy. >> It, was, It, was, a, lot, of, money., So,, we spent, you know, we did a bunch of uh survey work. Uh we came up with our own understanding of what an Uber driver's net earnings were. And w..."

"You, also, saw, a, lot, of, turnover, in, those days because I think drivers were coming to the conclusion over time that the their own individual return on invested capital wasn't sufficient. We sort..."

"So there had been lots of leverage put into the system. I would say that the folks who had uh owned medallions and operated fleets had been extractive. So they hadn't been investing in the business. T..."

"But, they, weren't, treating, their, customer the right way. They were being, I, abusive. >> Yeah., I, mean,, it, was, uh, it, was, obvious what was going on. So, there's really negative relationships..."

"Didn't, you, also, at, some, point, go, into some government office and ask for some data set and they're like, "Yeah, no one's ever asked for this before." >> So, the, TLC, who's, been, a, who's, lik..."

"So she gave us like terabytes and terabytes of data. We had to >> ride, level, data,, right? >> Ride, by, ride, the, entire, data, set., Uh, it was it was a lot of data. It was uh we tried to load it ..."

"where am I knowing what am I wearing what's the weather, uh what do I think the traffic pattern looks like, day of the week, and they say in that with that algorithm, they make a decision. Am I going ..."

"and, it's, obvious., It's, it, makes, sense. You you relate to it in killing all taxes. >> Exactly., And, so, you, saw, how, New, Yorkers were making decisions. And like I said earlier, it squared wit..."

"Drivers who were under earning looked like a rorchack test. It was just a scattergram of behavior. And as a consequence, they were under earning what we thought they could and should. By the way, fast..."

"Right., We'll, guarantee, the, 200., And, by the way, if you earn more than 200, keep it. We ran dozens and dozens of experiments. How many payouts did we make? >> Tons, of, payouts, above, the, 200. ..."

"So, the data showed that if you picked up at the bottom of Broadway, um you were high probability, you know, around sort of uh Columbus Circle, you were um going to drop off somewhere north on Broadwa..."

"Terrible, job, of, telling, when, concerts were going to be all at MSG, obviously. And you know, I know you're a Knicks fan. You've come out of out of MSG. And where the hell are the Cavs? >> Uh, don'..."

"So there's just like a cultural divide. They don't know all the time where to go. the best drivers figure it out over time and again develop a system. We sort of took all that data from the TLC and we..."

"We want to move everybody whether you're uh middle market manufacturing company or a taxi driver to a datadriven decision. Right? that datadriven decision has more persistency to it. Um, it has a high..."

"You you, get, this, insight, and, all, of, a, sudden it goes from the worst idea you've ever heard to like maybe feasible. Talk about the transaction or transactions to buy into the into the space. So..."

"to this. We went to speak to virtually every serer out there about you know could they help us? And um the answer for 97% of them was absolutely not. We want nothing to do with this. Uh politically se..."

">> Hardly., But, I, think, one, of, the, good pieces of advice that we got um actually from uh uh Risa Heler who has a runs a firm called Heler Communications who has advised us uh throughout this and..."

"I think the other thing that we did again I think that has worked to our benefit over time. I described earlier there was this contentiousness in the space uh labor operator capital. Nobody really eve..."

">> How, do, you, think, about, that, now?, So,, you you're X amount of dollars in, you own 4,000 something odd medallions. Walk us to, the, end, of, the, story, or, at least, the, current snapshot of ..."

"LaGuardia looked at the system said this is terrible. Uh nobody can get around. uh we need to shrink congestion, get cars off the street so that the city can operate. They introduced the medallion sys..."

"If you look back on this relative to everything else you've done with investing, how good of an investment would you say this was? >> Excellent. >> Why, is, is, that, an, IR?, Is, it, a riskadjusted t..."

">> Yeah,, it's, an, incredible, it's, an incredible story. one of my favorite investing stories. Like probably no one's ever thought of the New York City medallions as like an asset class or something..."

">> You've, done, a, lot, of, negotiation, um, in in interesting unique circumstances often, as you pointed out, in very hard circumstances for people around the table. Any other like ironclad principl..."

"So maybe use that example as one where there is an incredible risk adjusted return that you can walk through, but but also like very keenly the reasons why it's possible in the first place when like u..."

"Again,, it's, probably, a poorly written law. So, uh, we started going out to, um, companies, uh, tax preparation firms, uh, people who deal in tax credits, uh, law firms, payroll processing firms, an..."

"Um, and if we were able to put back the company owed us our capital back plus a rate. So you might ask yourself, well, why were why were people It was US government counterparty risk. Why would you do..."

"And so from, you know going back to the foundation story of Marblegate, you know, when Paul and I sat down, we said, "Look, the world has a Howard Marx and um the world has a uh Mark Rowan. The world ..."

"What, is, the, hardest, thing, that, you've, ever had to pull off as part of Marble Gates entire story? >> That's, a, great, question., Look,, we're constantly seeking new challenge. Um when we were y..."

">> and, so, if, you, had, to, isolate, like, the most difficult workout or the thing that like kept you up the most at night is there one or is it always there's just always a component of You know, o..."

">> I'm, curious, since, it's, people, going through the hardest thing they've ever gone through, how often that spills over onto you? Like how often do do you feel like they believe you're the villain..."

"What, motivates, you?, Like, what, is, what are like if you just if I kept asking that question like eight layers deep where would I go? >> It's, a, great, question., Look,, I, like the problem solvin..."

"If, I, was, to, go, see, your, whole, life, story in a movie or something, um let's say like preol or something, early part of your life, and isolate the stories or the things that were most formative..."

"Uh, at, the, same, time, we, also, saw, people of uh real character lean in uh people who to this day I consider like family because they just embraced us and uh took care of us. >> People, who, have,..."

"Uh she really pushed us to leave. She said, you know, I want you to go out into the world and find your own way. >> Um,, and, and, look,, I, come, from, a, good tradition of that. My uh uh grandfather..."

"to map that back onto where we started with the K-shaped economy. Give us your just like sense like your state of things and how you feel about it having been you know a person produced, by, one, of t..."

"Where, do, you, see, that, most, acutely? >> Big, parts, of, the, credit, market., The primary vehicle for credit creation and corporate credit over the past 10-15 years has been uh the CLO. So CLOS's..."

"So there's a lot of outsourcing of critical thinking because I can go to this person that can that'll make this decision for me and I'll go to this person who will make that decision for me. And so ag..."

">> Also any other commentary on private credit and private credit markets in general and then also on equities. You have such a unique vantage point. So just like big picture view on those two big spa..."

"Um according to Fitch about 82% of uh the private credit market exists in the single B minus and lower credit credit quality space. Look we have 40 years of data that tells us how various credit quali..."

"and, how, do, they, do, that >> well, defaults, are, the, most, easily manipulated statistic in the world a default doesn't exist unless I the lender call it >> and, so, if, I, don't, want, defaults, ..."

"that investment. I pretty straightforward. We see some portfolios in the BDC market that have 17 18% pick debt. I mean they're not they're no longer lenders at that point. They're taking massive amoun..."

">> What's, your, commentary, on, private, equity which is a key counterpart to that? I love those guys. That's my manufacturing division. Um, look, like everything there are some people who are doing ..."

">> Looking, to, the, future,, what, do, you, most hope you get to do more of that Marblegate becomes? Where will you spend your time and attention based on your interest right now? >> We, sit, at, a, ..."

"Uh there are some things that have you know gotten a lot of heat. Interval funds are uh getting a lot of attention. I think there are some strengths and some weaknesses to that. Uh I think that you kn..."

"that has never been your, approach, uh, you're, one, of the, more unique investors that I know I love talking about investing I think what you do is uh it's just different And obviously it works. Proo..."