Transcript Notes

Bank Of Hawaii — January 22, 2024

Stable low cost deposits are a bank’s greatest asset.

We consider our deposit base to be the crown jewel of the franchise, built slowly over 125 years of our history in the islands, one relationship at a time. As most of you know, Hawaii is maybe the most unique deposit market in the country, where 5 locally headquartered banks hold 97% of the state's FDIC reported deposits. As I mentioned, we have an amazing tenure in our deposit relationships with 53% of our deposits with a tenure of 20 years or more, and 75% of our deposits having a -- of 10 years or more. Despite the volatility created by the regional bank crisis in the first quarter of 2023, both average and spot balances have been steady and growing throughout the year. Further, noninterest-bearing deposits have begun to stabilize, with average noninterest-bearing deposits in December flat to November's month average.

For the year, you can see Bank of Hawaii meaningly outperformed banks nationally and deposit growth, as shown in the H8 data. I'd note, too, that we generated that performance without the usage of broker deposits. Deposit pricing relative to broader industry averages remains a strong story in terms of cost of interest-bearing deposits and total cost of funds, bases appear to be flattening.

Oahu’s office market continues to shrink. These types of scenarios tend to lead to tight markets down the road.

While not immune from the changing dynamics impacting the office market across the U.S., vacancy and rents have remained relatively resilient in the office market on Oahu as conversions to alternative use continued to reduce overall inventory levels. In the last 5 years alone, approximately 1 million square feet of inventory have been removed and its estimated an additional 300,000 square feet will be removed in the next several years.

Viatris - January 10, 2024

Viatris is poised to return meaningful amounts of capital (particularly in relation to its market cap) over the next several years.

we're going to execute our strategic plan, right, and our capital allocation plan. Approximately over the next 3 to 5 years, 50% of that free cash flow, which, at a minimum, should be at the $2.3 billion range, 50% return to shareholders through share buybacks which we're going to try and be increasingly aggressive around as we move in '24 and '25

I think the other thing that is important from -- for a purpose of understanding as to what Scott talked about it because we will be aggressively buying back shares

We're going to be able to pay down the debt to the target ratio that we're looking for, we're going to be able to continue with the dividend. We're going to be able to get more aggressive in terms of share buybacks during the course of this year, and we're going to be able to do substantial business development.

Hilton Grand Vacations - November 6, 2023

HGV believes its acquisition of Bluegreen will be accretive to free cash flow conversion while not impacting their ability to continue to return meaningful capital to shareholders

In general, the inventory carries a lower cost of product and increased pricing incrementality, enabling us to offer more attractive price points to consumers, growing HGV's member base and fueling embedded value creation. It also allows efficient recapture of inventory, reducing the level of maintenance inventory spending required to drive sales growth. Those 2 factors will support increased conversion of EBITDA into adjusted free cash flow. That cash flow will allow rapid deleverage following the close of the transaction. Pro forma leverage is 3.4x, and we expect to reduce our leverage to under 3x within 18 months, and we are maintaining our target leverage of 2 to 3x.

And importantly, this transaction will not impact our ability to return cash to shareholders through share repurchases, preserving our capital allocation strategy and enabling us to maintain our focus on maximizing shareholder value. via repurchases.

T. Rowe Price - February 8, 2024

T. Rowe generates a ton of cash and is allocating more to share repurchases recently, a trend that should continue in 2024.

we also kind of generate a lot of cash flow and historically have been opportunistic with regard to our share repurchase. I'd say what has changed at the margin last year was that the buyback was more muted given lower free cash flow after the dividend. I think if you think about the order of magnitude for potential over the course of 2024 based on our planning, it's not going to go back to the $1 billion a year or the levels that you saw in years before 2023. But I think we will be opportunistic and we'll take advantage of opportunities in the marketplace to repurchase shares. And over time, I have an objective of taking the share count lower

British American Tobacco - February 8, 2024

Management is evaluating unlocking some of their ITC position. With a significant valuation discrepancy, selling some of the ITC position to repurchase stock could prove highly accretive to BTI shareholders.

And as part of this, we regularly review our stake in ITC. We recognize that we have a significant shareholding, which offers us the opportunity to release and reallocate some capital.

we cannot ignore the fact that the major assets that we have in the balance sheet is the association with the ITC as an associate. So that's the reason why we are talking about ITC in this release today. We have today -- we want to keep a level of influence in ITC that is transforming itself. Based on local legislation, we need to have as a minimum 25% of shareholders to keep veto rights we would like to do in the first phase. And this means that, given the fact that we have above [ 29% ], there is space for us to reduce our shareholding.

Blackrock - January 12, 2024

Blackrock has done a good job repurchasing shares. We wish all companies that repurchased shares quantified how much value they add (or destroy).

Since 2013, we've repurchased close to $15 billion of BlackRock stock, which generated an unlevered compound annual return of 14% for our shareholders. Over this time period, we reduced our share count by nearly 23 million shares or 13%. For the trailing 5 years, we've lowered our share count by 10 million shares completing $7.8 billion of share repurchases at an average price of $563 for an IRR of over 15%.

McKesson - February 7, 2024

McKesson thinks GLP-1 growth rates will slow against tough comparables.

Well, I think as we think about GLP-1s, obviously, 4 quarters ago was a big growth quarter. We're going to start to lap that. I think my characterization is there will continue to be growth, that growth may or may not be linear depending on product launches, uptakes how commercial, government, other payers, adopt policies to manage these products. So I think it's going to be growth, it's going to be slowed compared to what it has been historically, and it's probably going to be a little bit lumpier than we would typically expect just because of the size of the class.

Philip Morris - February 21, 2024

Sweden serves as case study of how to eliminate smoking by transitioning smokers to reduced risk products.

This is what's happened to Sweden that up till '80s, the cigarette sales was growing and they had the first version of oral tobacco pouches, the snus product, they improve it by changing the processing process, they significantly reduced the exposure to the tobacco-specific nitrosamines, TSNAs, which are very carcinogenic. The product changed, the form, et cetera, and the product starts getting an acceptance.

Took about 35 years -- 30 years, the moment when the Sweden has dropped the smoking incidence to the -- this day it's about the 5%. 5%, by the way, is by many -- in many countries, recognized as the standard behind or below which the government, the regulators thinks that the problem of smoking has been resolved. I actually think we should go for this remaining 5% as well, but we leave this conversation aside. So it took quite a few decades for Sweden to essentially eliminate or reduce the smoking to the very low levels and just with the one product platform.

Domino’s Pizza - January 8, 2024

Domino’s delivery customers tend to be distinct from their carry-out customers. Likewise, UberEats customers tend to be distinct from Domino’s delivery and carry-out customers.

So Uber certainly is going to be a place for incremental customers, and we're -- our data shows probably 65% of those customers are going to be incremental.

Brookfield Corporation - February 8, 2024

Brookfield’s real estate business continues to perform despite the market’s scepticism about it.

In our real estate business, our core portfolio continues to outperform the broader market with occupancy levels at 96% and growth in same-store net operating income of 7% compared to the prior year. Our core retail portfolio is performing above 2019 levels with tenant sales exceeding $1,150 per square foot, 21% higher than 2019. In our office portfolio, we continue to capture tenant demand with over 15 million square feet of leases completed in 2023 at average net rents 19% higher than those expiring. This includes nearly 1 million square feet leased in New York, over 850,000 square feet in Toronto and Calgary and 1 million square feet in Washington, D.C.

Interactive Brokers - January 17, 2024

Interactive Brokers has some of the highest pre-tax margins we’ve ever come across.

Our pretax margin was 71% for the full year by far, the highest in the industry. In fact, very few public companies in any industry have that kind of profit margin. If market conditions continue as they are and with the 3 interest rate cuts being predicted, I see no reason why we wouldn't be able to maintain pretax margin at the 70% level…

Automation and expense control, along with thoughtful management of our balance sheet, remain our key means of maintaining high margins while we invest in the future of our business.

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