Below is a link to a follow-up interview that my colleague,
Matt Miller, conducted with Tim Klusas, President of The Marketing Alliance,
Inc (MAAL.pk). The first
interview Matt conducted with Tim occurred in October of 2009 (HERE).
I also wrote an article for Seeking Alpha mentioning The Marketing Alliance
last year (HERE).
…
Excerpt:
Matt Miller: With
this acquisition, the model for The Marketing Alliance appears to be
changing. Can you provide your vision
for the company in five to ten years?
Are you attempting to build a diversified holding company, something
perhaps akin to a Berkshire Hathaway?
Are there other models out there that you hold in particularly high
regard?
Tim Klusas: We continued to build the company over the last
five or six years. It is a wonderful company with distributors and customers we
admire and we try to operate the business like our life depends on it - simply
because for many of our customers we know their agencies are the largest asset
they have. We have invested in the
business to grow and increase its attractiveness to distributors, but have
resisted the feeling that we have to put capital to work now or lose it. We feel that being compelled to do so could
lead to destruction of value.
We continue to look for ways to add value in the current
distribution business, but rather than feeling compelled to invest we opted to
also look for ways to put capital to work in other areas that might result in
the same sorts of returns, even if it is outside of the insurance distribution
business. As an example, if you could
equate what we are doing to finding another asset that generates cash, a “cash
machine”, what we are trying to do is use one cash machine to develop other
cash machines. By cash machines, I mean
one that generates cash returns for our shareholders. And we look for characteristics that we see
in the current insurance business and try to look for some of those
characteristics in other businesses to try and build those up as well. If we do our job correctly, what we’ll have
in the future is a few cash machines that throw off returns for shareholders
and generate excess cash that we can use to go find others. I guess this is why you mention Berkshire
Hathaway as a comparison. And so my
vision for the company would be to have various machines that generate returns
for shareholders in the form of cash that we can use to generate even more
machines for shareholders that deliver cash.
And when I look at different models out there, you mention
Berkshire Hathaway but I also point to Leucadia and Teledyne as other
examples. Leucadia comes to mind where
they, in my interpretation, go anywhere to get a cash return for the
shareholder. That is what we’re really
trying to do. We’re more concerned with
the cash return than we are whether it is a pretty business, is it a popular
business or what the public opinion poll says about this business or that business. Our concern is getting that cash return. I also mention Teledyne because in addition
to being prudent capital allocators we also strive to be good operators, where
we can introduce internal controls and planning to help a business achieve its
potential.
Forward Looking
Statement
Investors are cautioned that forward-looking statements
involve risks and uncertainties that may affect the business and prospects of
The Marketing Alliance, Inc. Any
forward-looking statements contained in this transcript represent the estimates
or expectations of The Marketing Alliance, Inc. only as of the date hereof, or
as of such earlier dates as are indicated, and should not be relied upon as
representing our estimates as of any subsequent date. These statements involve a number of risks
and uncertainties, including, but not limited to, general changes in economic
conditions. While The Marketing
Alliance, Inc. may elect to update forward-looking statements at some point in
the future, it specifically disclaims any obligation to do so.
Disclosure: Matthew Miller is a portfolio manager at
Chanticleer Advisors and the fund Chanticleer manages owns shares in The
Marketing Alliance, Inc. It may in the future buy or sell shares and it is
under no obligation to update its activities. This is not a recommendation to
buy or sell a security. Please do your own research before making an investment
decision.