David Rubenstein and Chuck Davis Deliver Fireside Chat at Greenwich Economic Forum | Traders Network Show – Greenwich, CT

Contributed by: Show Editorial Team

David Rubenstein, Co-Founder of the Carlyle Group, interviews Chuck Davis, CEO of Stone Point Capital at Greenwich Economic Forum (Greenwich, CT)

HIGHLIGHTS

  • Stone Point Capital manages 8 private equity funds with capital over $25 billion
  • Stone Point Capital model returns between high teens and low 20’s
  • Stone Point Capital has $17.9 billion in AUM

FULL COVERAGE

INTERVIEW TRANSCRIPTS: David Rubenstein, Co-Founder of The Carlyle Group and Chuck Davis, CEO of Stone Point Capital

Julia La Roche – Correspondent, Yahoo Finance: 00:00

Our next panel will be another fireside chat. This time the moderator is David Rubenstein of the Carlyle group. You should also check out his show and he will be interviewing Chuck Davis, the CEO of Stone Point Capital. Take it away gentlemen.

David Rubenstein – Co-Founder, The Carlyle Group: 00:17

Fine. Okay. Okay. So Chuck, you’ve been an investment banker and you’ve been a private equity investor, which is the higher calling of mankind. Cause they’re both so important.

Chuck Davis – CEO, Stone Point Capital: 00:32

Well that’s a tough start. Well when I was on wall street in New York City, the world was wondering why New Jersey had toxic waste and New York had investment bankers. And then we found out the reason why as New Jersey had toxic waste cause they got the first choice. Okay. So I moved to private equity.

David Rubenstein – Co-Founder, The Carlyle Group: 00:50

And you moved to Greenwich, Connecticut?

Chuck Davis – CEO, Stone Point Capital: 00:52

I did. I left investment banking two months after I moved to Connecticut because when I came over this, the border, I saw this big sign in Greenwich that said speed limit 2 and 20 and I didn’t know what that was but I thought that was a nice feature.

David Rubenstein – Co-Founder, The Carlyle Group: 01:09

So what is the, what is the reason somebody should be based in Greenwich, Connecticut, now that we’re in Greenwich?

Chuck Davis – CEO, Stone Point Capital: 01:16

Bucolic, wonderful, great school systems, beautiful homes, nice people.

David Rubenstein – Co-Founder, The Carlyle Group: 01:22

Do you ever have to go into the city?

Chuck Davis – CEO, Stone Point Capital: 01:24

All the time.

David Rubenstein – Co-Founder, The Carlyle Group: 01:26

But you come back every night here?

Chuck Davis – CEO, Stone Point Capital: 01:28

Most of the time.

David Rubenstein – Co-Founder, The Carlyle Group: 01:29

Yes. So let’s talk about your investment banking career. You were a Goldman partner before the IPO. Okay. So what did it feel like when you went public? Did you feel like you’d made more money than you ever thought you were going to make?

Chuck Davis – CEO, Stone Point Capital: 01:42

Goldman was a great place for me. I enjoyed virtually every minute of my 20 years.

David Rubenstein – Co-Founder, The Carlyle Group: 01:46

And what was your main responsibility when you left?

Chuck Davis – CEO, Stone Point Capital: 01:49

Just general investment banking. You know, the great thing about investment banking is that in your early twenties you get to sit in board rooms and watch them make decisions on the most important things companies do. And you get a lot of time with CEOs on important issues. So from very early in your career, you get an enormous amount of exposure. So having 20 years of that in hundreds of companies and hundreds of board rooms in different industries all over the world. It was just a great education.

David Rubenstein – Co-Founder, The Carlyle Group: 02:18

So how did you get into Goldman to begin with? Did you grow up thinking I want to be an investment banker when I grow up? Is that what your life goal was when you were a kid?

Chuck Davis – CEO, Stone Point Capital: 02:27

No. I flunked out of college twice and eventually became a physical education major. My father said I was majoring in tapes and sweat bands.

David Rubenstein – Co-Founder, The Carlyle Group: 02:37

Is that a hard major to do?

Chuck Davis – CEO, Stone Point Capital: 02:41

Oh it’s very hard.

David Rubenstein – Co-Founder, The Carlyle Group: 02:43

I know a lot of athletes have majored in that.

Chuck Davis – CEO, Stone Point Capital: 02:46

There’s a lot of pull ups and push-ups.

David Rubenstein – Co-Founder, The Carlyle Group: 02:49

So how did you pull yourself together?

Chuck Davis – CEO, Stone Point Capital: 02:53

Well, it’s a long-complicated story. I think it would be better to have a glass of wine to talk about. Okay. The 30 second version is that I played a lot of sports in college and I love.

David Rubenstein – Co-Founder, The Carlyle Group: 03:08

You were an athlete in what area?

Chuck Davis – CEO, Stone Point Capital: 03:11

I played three varsity sports back when you could do that. And to me the game was wonderful and I loved the team bus. I loved the locker room. I loved the huddle.

David Rubenstein – Co-Founder, The Carlyle Group: 03:20

What were the sports?

Chuck Davis – CEO, Stone Point Capital: 03:22

Soccer, basketball and tennis. And when I ran out of athletic eligibility and there weren’t no pro contracts heading my way, I would look for another game to play. And I was always good at numbers. I love to memorize baseball averages when I was a little kid and I realized finance was all about the numbers.

David Rubenstein – Co-Founder, The Carlyle Group: 03:41

You were not an NBA prospect at in college?

Chuck Davis – CEO, Stone Point Capital: 03:44

No. No.

David Rubenstein – Co-Founder, The Carlyle Group: 03:46

Okay. So you went into finance and Goldman just said after you got your MBA, let’s hire him.

Chuck Davis – CEO, Stone Point Capital: 03:49

Yes.

David Rubenstein – Co-Founder, The Carlyle Group: 03:51

Okay. And then when you got there, did you realize you were not ready for that job or?

Chuck Davis – CEO, Stone Point Capital: 03:55

Yeah, while the first day of Columbia Business School, everyone had to stand up and say, hi, I’m David Rubenstein, economics Princeton. Hi, I’m Joanne Swanson, accounting Stanford. And I stood up and said, Chuck Davis, physical education, University of Vermont. The entire class laughed. I mean they thought I was kidding.

David Rubenstein – Co-Founder, The Carlyle Group: 04:17

And now all those people, but later, all those people came to you for jobs, right?

Chuck Davis – CEO, Stone Point Capital: 04:22

Yeah, yeah, sure. But the man who chose to call me back to Goldman, who was a person you know pretty well about a month or two into my career he decided that he had made a mistake and spent the next year campaigning to have me fired. So that was a tough first year. And he wasn’t wrong. I was not trained.

David Rubenstein – Co-Founder, The Carlyle Group: 04:46

Did it take him a year to figure out how to get rid of you or they couldn’t get rid of you.

Chuck Davis – CEO, Stone Point Capital: 04:50

It took him three weeks to figure out he wanted to get rid of me. It took him a year to.

David Rubenstein – Co-Founder, The Carlyle Group: 04:53

But did you survive and outlast him?

Chuck Davis – CEO, Stone Point Capital: 04:57

No, I didn’t outlast him. He and I became good friends and we worked together for a long time.

David Rubenstein – Co-Founder, The Carlyle Group: 05:05

So when you left Goldman, you then went into private equity. How did you decide to start set up in financial services? Cause that’s not an area that private equity had really been that active in because of the regulatory issues?

Chuck Davis – CEO, Stone Point Capital: 05:16

Well first of all, investment banking is a great training ground for private equity because of all the experiences you get and the deal flow. But it’s very different because private equity investment banking’s a factory, it’s all about volume. There’s a quality control mechanism. But the person who does the most deals wins. And the most important word is yes. How do I do this for the client? Private equity, the most important words? No, the hardest word is yes. So it’s a real mind shift in terms of the way you look at things. The glass has to be half empty, not half full. But I loved investment banking and I loved working with talented people and I thought being a principal would be more fun being an agent.

David Rubenstein – Co-Founder, The Carlyle Group: 06:00

So Stone Point is now in its what year?

Chuck Davis – CEO, Stone Point Capital: 06:05

20 something.

David Rubenstein – Co-Founder, The Carlyle Group: 06:07

20 some years. And you’re on your eighth fund or something. Okay. So you are the biggest of the private equity firms that do nothing but financial services. So how did you happen to become the biggest and what did you do that everybody else wasn’t able to do so well?

Chuck Davis – CEO, Stone Point Capital: 06:21

Well, we’re focused very much on dislocations and we’re big supply and demand folks. So when the wind blows and there’s a big hurricane loss, we can set up a new insurance company. When the credit crisis hits the banking system, we hadn’t done a bank deal in eight years before the crisis. We did 39 bank deals more than anyone in the United States after having done none for eight years, because we knew the owner operators, we knew the regulators, we knew the regulations, and we felt like there was a big dislocation. So we like dislocation, supply and demand imbalances. We’re not restructuring people. We’re not turnaround people. We’re not cost-cutting. We like to grow businesses. We’ve done 47 startups. We’ve created thousands and thousands of jobs.

David Rubenstein – Co-Founder, The Carlyle Group: 07:10

What’s your best deal?

Chuck Davis – CEO, Stone Point Capital: 07:13

Well, the best deal is the most recent deal. Two weeks ago we just sold an insurance company. We started from scratch in White Plains for $3.3 billion to Tokyo fire. And Marine as a company, we set up to the management team and $100 million of capital 14 years ago. So you always like your latest deal.

David Rubenstein – Co-Founder, The Carlyle Group: 07:32

So how much you put in, how much money, 100 million?

Chuck Davis – CEO, Stone Point Capital: 07:35

Over time. Yeah 500 million.

David Rubenstein – Co-Founder, The Carlyle Group: 07:37

500 million. And that became worth

Chuck Davis – CEO, Stone Point Capital: 07:39

3.3 billion.

David Rubenstein – Co-Founder, The Carlyle Group: 07:41

Right. So your investors are happy?

Chuck Davis – CEO, Stone Point Capital: 07:43

They should be. You know these investors, many of them are sitting here.

David Rubenstein – Co-Founder, The Carlyle Group: 07:49

So today would you advise anybody to get into the financial services, private equity business to compete with?

Chuck Davis – CEO, Stone Point Capital: 07:55

No, no.

David Rubenstein – Co-Founder, The Carlyle Group: 07:58

You know, who would say it’s not a good idea?

Chuck Davis – CEO, Stone Point Capital: 07:59

Why would you want to do that?

David Rubenstein – Co-Founder, The Carlyle Group: 08:00

Right. Okay. So many people who have been very successful at Goldman in the financial service area have gone on to serve as Secretary of the Treasury or in government. So are you thinking of going to government anytime soon?

Chuck Davis – CEO, Stone Point Capital: 08:12

No.

David Rubenstein – Co-Founder, The Carlyle Group: 08:13

And the reason is?

Chuck Davis – CEO, Stone Point Capital: 08:15

I’m very happy doing what I’m doing.

David Rubenstein – Co-Founder, The Carlyle Group: 08:17

Okay. So in addition to financial services, you are involved in philanthropy and you might describe something that we talked about earlier. One of the things relating to a member of your family. Now as we’ve talked about, and as I think everybody here knows the toughest thing in life without doubt, no doubt about it, is having to deal with it, the death of a child. And that’s when you had to deal with, so you might describe what happened and why you’re so involved in the philanthropy relating to this very unique disease.

Chuck Davis – CEO, Stone Point Capital: 08:47

Well, there’s a lot of people that are involved in philanthropy and people have causes that they feel strongly about. And obviously Paul and Ray got into that at great length. Unfortunately, the cause that I’m most interested in is that is trying to cure the cancer that, that my son died from. And when my son was diagnosed 10 years ago, 12 years ago, he was told, and we were told that he had a stage four terminal cancer and that he would probably not live more than a month or two. He set up a foundation and he said to his mom and I, if we can’t cure this for me, I want you to cure it for everybody else and we will never forget him saying that he spent 19 months fighting the disease, every chemo and radiation and operation you could have, always with the most amazing spirit. And he built this foundation. So, when he died, we took it and tried to make progress and we now have a tremendous amount of progress. Actually, tomorrow is our research summit. We have 60 people coming from all over the world that are doing research on the grants that our foundation gives to try to cure this very rare.

David Rubenstein – Co-Founder, The Carlyle Group: 09:45

What type of cancer? Describe it and how to have somebody know when you have it.

Chuck Davis – CEO, Stone Point Capital: 10:15

Well, unfortunately, you don’t know you have it until it’s too late. It’s very rare. It’s called fibrolamellar carcinoma. It only happens to young people, more girls than boys. 200 cases a year starts in the liver and they know that there’s no cure. And our son had never spent a night in a hospital in his life since he was born. And all of a sudden, he had a pain in his leg, which turned out to be a clot because cancer cells cause clotting and went to the doctor. And, and that was that. So we’ve made a lot of progress.

David Rubenstein – Co-Founder, The Carlyle Group: 10:45

What’s the name of the foundation?

Chuck Davis – CEO, Stone Point Capital: 10:54

It’s FCF – fibrolamellar cancer foundation, fcf.com. We’re always open to her money raising. But we just, one of the grants that we gave, we have now discovered the gene or the scientists did the gene that mutates and causes this cancer, which we’re told is incredibly amazing discovery. And now we’re trying to use immunotherapy and all kinds of other research grants to take it further. And hopefully this rare cancer has correlations with other cancer. But unfortunately, cancer’s a pretty tricky thing. It’s not something that seems to be able to be solved quickly. So anyway, we’re on it.

David Rubenstein – Co-Founder, The Carlyle Group: 11:41

It’s your principle philanthropic endeavor.

Chuck Davis – CEO, Stone Point Capital: 11:43

It’s the one that we have certainly the most emotion involved in.

David Rubenstein – Co-Founder, The Carlyle Group: 11:54

So when you are looking at deals today, some people would say price are very high. So when somebody comes to you and says, well it’s 14 times EBITDA, but really it’s really 10 or it’s 14 times EBITDA, but it’s in 2028 it will be 10 times EBITDA, something like that. Would you roll your eyes at these prices you have to pay and you just, you know, hope for the best. Why do you, how do you get comfortable with these prices.

Chuck Davis – CEO, Stone Point Capital: 12:15

While we’re doing 10 things that’s don’t plant capital. I’ll tell you at two or three of them, anybody who wants to hear all 10 happy to have a cup of coffee afterwards, but the first thing we’re doing is just losing an enormous amount of deals. Our funnel has never been broader. We have never seen more deals. We’ve never seen higher quality deals. We’ve never wanted to do deals more than the deals we’re saying and we’re just losing. And it’s very frustrating because the owner operators usually want us because we spend more time in the space and have more ability to potentially be helpful and we just can’t get there and we’re losing by 20, 30, 40% and when you think that half of that is debt, sometimes we’re losing by 40, 60, 80% this could last for a long time and it’s already lasted for a number of years, but it’s really gotten in the last 12 to 18 months. It’s really gotten to the point where it’s very troubling.

Chuck Davis – CEO, Stone Point Capital: 13:05

So number one, we’re losing a lot of deals. Number two, we’re investing in counter cyclical businesses, businesses that do find now, but that’ll do better in a bad environment. We own the nation’s leading bankruptcy software company for lawyers when they administer bankruptcies, so they’re doing fine. Now if bankruptcy’s accelerate, that company will do really well. We own the nation’s leading special servicer of commercial mortgages, Realto. They have $110 billion worth of special servicing. When a loan gets in trouble and gets pulled out of the CMBS that it’s priced in, then the special servicer charges a big fee to take care of it. When we started that company and we invest in that company a little over a year ago, they had 400 million of their 110 billion in special servicing. It’s now 2.4 billion. They’re doing really well now, but when things get bad, they’ll do better. We all know nation’s leading consumer debt consolidation firm that helps people get out of debt. They’re making a lot of money right now, helping company, helping individuals get out of debt. If the delinquency rates go up and back to normal or higher. This company’s very well positioned. So that’s the kind of thing we’re doing while we wait for rational behavior.

David Rubenstein – Co-Founder, The Carlyle Group: 14:27

Well, I suppose I like what I hear from you and I say, I want to put money with you. When you have a fund available, I don’t know when you have an extra fund available.

Chuck Davis – CEO, Stone Point Capital: 14:35

Are you an accredited investor?

David Rubenstein – Co-Founder, The Carlyle Group: 14:39

I’ll have to check with my children on how much they’ve spent recently. But let’s say I like what you you’re doing, what kind of rate of return am I likely to get when I put my money with you? Am I going to get a 20% net? 15% net 13, 12, 10 what do you think I should expect?

Chuck Davis – CEO, Stone Point Capital: 15:00

I would hope higher than Carlyle, but you never know. We model returns in the high teens, low twenties-based kind of rates of return in the mid-teens. But our assumptions are for the first time in 20 years, the exit multiple is lower than the entry multiple in our models, which makes the model very tough to work. And we’re relying more on leverage than ever before and we’re relying more on tuck under acquisitions to help the company grow and succeed. So our return expectations haven’t changed very much, but I’d say the risk adjustments that we make probably make it less than it was 10 years ago.

David Rubenstein – Co-Founder, The Carlyle Group:15:44

Based on all the companies you own now on behalf of investors; do you see the prospect of a recession in 2020 do you see any indicators from those companies that maybe were heading to recession or you don’t see that?

Chuck Davis – CEO, Stone Point Capital: 15:58

Well, I listened to Ray and Paul by the way. One of the reasons I’m smiling is I took a double dose of Prozac after they spoke. I didn’t have the 10 shots of vodka that Paul recommended. We are, you know, the consumer’s two thirds of the economy. The house is the key to the consumer. Home prices and mortgages were what really did us in last time. We don’t see strains there. But there are certainly a lot of long-term credit growth in public and private sector as Ray said. So I would say we probably won’t have a recession in 2020 but one thing I forget, and a lot of people forget is recession start at peak moments when the stock market’s at all-time highs and when employment is at peak levels. Recessions don’t start when things are bad. So we’re certainly in an environment where it could go the wrong way pretty easily.

David Rubenstein – Co-Founder, The Carlyle Group:16:55

So somebody listening to this will say, this guy has got a terrific track record. He’s done a great job at Goldman, everything’s worked. Tell me some bad deal that you did. What’s the worst deal you did? There must be some deal. It might be one deal. That tiny amount of money that didn’t work. Yeah. And you can remember that.

Chuck Davis – CEO, Stone Point Capital: 17:12

You know, I really can’t think of one.

David Rubenstein – Co-Founder, The Carlyle Group:17:14

There wasn’t one deal that didn’t work out?

Chuck Davis – CEO, Stone Point Capital: 17:16

Oh yeah, no. We’ve done 150 deals and I think we’ve lost money three or four or five times. None in the last several years.

David Rubenstein – Co-Founder, The Carlyle Group:17:24

What was the mistake or the mistake that was made was what?

Chuck Davis – CEO, Stone Point Capital: 17:27

We believe in backing people and backing owner operators. We disagree with Warren Buffet that when a bad business meets a good manager, the business wins. We think good people figure out how to make things work. And we think people that aren’t top, top drawer can take a great business and not do well with it. So the mistakes we’ve made is we backed some people that just weren’t as good as we hoped and expected our fault, not theirs. We’re the ones that decided.

David Rubenstein – Co-Founder, The Carlyle Group:17:51

So there’s been some criticism of private equity by some people running for President United States. So if you had a chance to meet with that one person and you were to say private equity actually does a good thing what would you actually say and do you think you’d make any progress with that one?

Chuck Davis – CEO, Stone Point Capital: 18:09

First of all, I would hopefully decline the opportunity to meet. But you know more about private equity than virtually anybody. Our strategy is building companies, backing people, doing startups, creating jobs. We don’t cut costs. We don’t fire people. We don’t restructure. We don’t close facilities. We back people that we think are really good at something and there’s a dislocation or supply and demand imbalance or a need for their product at this moment in time. And when we’re wrong about that, we’d go away quietly. But we are not I, I just think we’ve created so many jobs and so much good fortune that I don’t, I’m not defensive about it.

David Rubenstein – Co-Founder, The Carlyle Group:19:00

Why do you think that is that the image of the private equity industry is not as great as some people in the industry think it should be. Why do people not run around saying, boy, thank you for being in the private equity industry?

Chuck Davis – CEO, Stone Point Capital: 19:12

Well, if you watch the Big Short or you watch Billions or you watch the new morning show, which by the way, it’s really interesting. Every single thing in those three venues has actually happened. It’s just not the norm. So someone sees the big short or watch his billions or the morning show and they think, wow, what a train wreck. But the fact of the matter is, the everyday business of private equity is a good business done by credible, hardworking, solid, high integrity people. But clearly the wealth dislocation in this country, which I certainly agree with Paul and Ray on, has gotten a very imbalanced and wealth creation is no longer something that’s, that’s viewed positively. It’s more vilified than complimented. And so private equity people have made a lot of money and it’s a tough business to be in at certain cocktail parties that you go to.

David Rubenstein – Co-Founder, The Carlyle Group:20:12

So President Bush, 43 when he spoke at Yale, once he said to the graduating class to all of you A students, congratulations, all your B students, pretty good, all you see students, you could be president United States. Now, have you been invited back to the University of Vermont ever? And to speak to people there and to say for all of you athletes, you could, you two could wind up a very good master of the universe in private equity.

Chuck Davis – CEO, Stone Point Capital: 20:36

I had a very bad first experience when they invited me back. They asked me to go on the board and University of Vermont is all about diversity and inclusion and it’s a place, and I got up on a podium in front of a very eclectic group of professors, students and people from the community. And I said, you know, this is really an important moment for the university because they’ve been talking about diversity and inclusion all these years. And here I am the first person since 1791 that’s ever been asked to join the board. That represents 25% of the alumni population, the bottom core tile of the class. Well they didn’t like hearing that so it got a little better from there.

David Rubenstein – Co-Founder, The Carlyle Group:21:22

But you’re on the board or you were on the board was on the board. Yeah. Okay. So, for people who have children here who are athletes, should they be pushing them out of athletics into academics or you’d say staying in athletics can make them become a private equity titan.

Chuck Davis – CEO, Stone Point Capital: 21:41

Follow your passion. If you really like something, you’ll probably be good at it. If you’re doing something cause your parents want you to or you think it’s prestigious or lucrative and you don’t like it, you’re not going to be good at it. So follow your passion.

David Rubenstein – Co-Founder, The Carlyle Group: 21:57

Suppose president Trump were to call you today and said, look, I read about you and I’ve seen the interview that you gave earlier today and actually you know a lot about finance. Can you come down and give me some advice about how I can get this economy growing at 3 or 4% a year? What would you say to him?

Chuck Davis – CEO, Stone Point Capital: 22:17

I just would rather not have that conversation.

David Rubenstein – Co-Founder, The Carlyle Group: 22:22

Okay, so you don’t want to talk to President Trump, you don’t want to talk to Elizabeth Warren, who do you like to talk to?

Chuck Davis – CEO, Stone Point Capital:22:30

You!

David Rubenstein – Co-Founder, The Carlyle Group:22:34

The much lower than those people. But okay. So a final question I’d like to ask you. So as you look back on your pretty impressive career at Goldman and private equity Stone Point work, what are you most proud of having achieved? And what would you say to young people are the most important attributes one should have in order to be successful in the financial services world? So first, what are you most proud of and what are the attributes?

Chuck Davis – CEO, Stone Point Capital:23:01

Well, one of the things I’m most proud of is I’ve been the chairman of the Hershey company and we have a female CEO who is spectacular. I’m the Senior Director at Progressive and we have a CEO who’s a female who just was named Fortune Magazine business Executive of the Year, first woman ever. We also recruited a woman to be the independent chair. So we’re the only fortune 1000 company with a female chair and a female CEO. Four of our portfolio companies is toll point, are run by women. We’d like it to be more, I think diversity and inclusion has been something that we focused on a lot. I’m very proud of that. I’m very proud of the team at Stone Point and the mission and the quality of what we’ve done and the environment that that we work in. It’s very collegial and cooperative and a lot like a sports team.

David Rubenstein – Co-Founder, The Carlyle Group:23:51

So what are the attributes? What are the attributes for success as you observed them? If somebody said, what, what does it take? Should I be a good writer, a good talker, brilliant analysts? What are the most important things for success?

Chuck Davis – CEO, Stone Point Capital:24:03

All the above. Oh, I, I think that people have to do what they really like and what they’re good at. And if they like business and they like people and they like numbers and they like taking risk and, and putting themselves out there private equity is a great business. Investment banking is a great business.

David Rubenstein – Co-Founder, The Carlyle Group:24:23

Deep down, is it really true that chocolate is healthy for you? And the more you eat, the healthier you get?

Chuck Davis – CEO, Stone Point Capital: 24:27

Absolutely. Particularly dark chocolate.

David Rubenstein – Co-Founder, The Carlyle Group:24:32

What about milk chocolate? I like that better.

Chuck Davis – CEO, Stone Point Capital: 24:34

Milk chocolate’s good too! All chocolates good. But you should know that Hershey has gone from the dominant chocolate company, which we’re very proud of, to a global snacking powerhouse. We bought Pirate’s Booty; we bought a Skinny Pop. We are very much moving into a snacking company.

David Rubenstein – Co-Founder, The Carlyle Group:24:53

Are all those things healthy for you?

Chuck Davis – CEO, Stone Point Capital: 24:56

They are in what’s called the “better for you” category. There is the indulgent category. We all need a moment to indulge. I certainly need it.

David Rubenstein – Co-Founder, The Carlyle Group: 25:00

Better for your cardiologist or better for you?

Chuck Davis – CEO, Stone Point Capital: 25:10

Better for you. So there’s indulgence, there’s better for you, and then there’s good for you. Unfortunately, very few people buy good for you, so we have to keep up.

David Rubenstein – Co-Founder, The Carlyle Group: 25:23

But you eat a couple of Hershey’s kisses everyday, I assume. And that’s good for you, right? Well, you look in good shape.

Chuck Davis – CEO, Stone Point Capital: 25:30

Okay, so far, David.

David Rubenstein – Co-Founder, The Carlyle Group: 25:31

All right, well thank you very much for a great conversation. Thank you all.

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