Looking for Scarcity and Resilience in Businesses

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Nov. 21 (Bloomberg) –- First Eagle Investment Management Global Value Team Head Matt McLennan discusses Oracle. He speaks with Adam Johnson and Olivia Sterns on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Allocating capital.

I know you are putting some money into cash and gold, but you still have some positions intact.

What do you like?

In a world that has monetary abundance, we try to find scarcity and resilience.

Scarcity provides you with buying power and a company like oracle, for example, you have a business model that is impossible to replicate.

They dominate the database.

It is hard to change the database once you have one.

If you look at the history of work a posh operating possibility, it is very stable and year after year increases.

Most profits come from maintenance costs.

Some investors said that internet and social media stocker at or near once is a noble levels.

Are we close to a bubble intact?

The problem you have is not that some of the businesses might not have prospects, it is valuation.

The price to sustainable cash flow generation is very high.

We do see a bubble level valuation.

We prefer all technology -- old technology that has been around for decades.

If it has been around for decades it is likely to be around for decades.

The money like oracle grind out proper year after year.

Did you think they would take over microsoft?

Fax that is a hard one to know.

We have lots of recurring revenue.

That provides them with the opportunity for growth.

We have single-digit operating profits.

Let's talk about the cap earnings -- gap earnings.

This text has been automatically generated. It may not be 100% accurate.


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