Art of Boring
Listen as Mawer Investment Management Ltd. takes a deeper dive into the investment philosophy and strategies that have helped put the odds in their clients’ favour for over 45 years.
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Quarterly Update | Q1 2024 | EP152
04/16/2024
Quarterly Update | Q1 2024 | EP152
As markets continue on a dynamic trend, fixed income portfolio manager Crista Caughlin discusses the economy and factors that drove markets in the first quarter of 2024. In addition, the reemergence of a more typical correlation pattern between stocks and bonds, getting central banks off the sidelines, and the concern that markets may be being too complacent. Key points from this episode: Global growth improving, inflation moderating, and earnings relatively strong In Canada, growth has improved although consumption remains weak when compared to the U.S. Moving with caution: strong data has begun to cause central banks to be cautious around timing of interest rate cuts—they want to be confident higher inflation is in the rear view mirror Strong equity markets—a continuation of the 2023 technology-focused businesses doing particularly well, especially if they have a tie in to AI or semiconductors Too much complacency? We may not have seen the full impact of higher interest rates, and you can see that in some areas we are seeing continued pressure (e.g., real estate, mortgage arrears, loan delinquencies) Host: Kevin Minas, CFA, Institutional Portfolio Manager Guests: Crista Caughlin, CFA, Mawer Portfolio Manager For more details and full transcript visit: This episode is available for download anywhere you get your podcasts. -- Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at . Follow us on social: Twitter - / mawer_invest LinkedIn - / mawer-investment-management
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Why Position Size Matters in Investing | EP151
03/28/2024
Why Position Size Matters in Investing | EP151
Portfolio Manager Manar Hassan-Agha discusses the importance of position sizing in investing and how factors like behavioural biases, market structures, and optimal betting strategies under the Kelly Criterion can impact returns at varying position weights. The conversation explores limitations in precisely calculating probabilities and edges for stock investments and how frameworks and checklists can be used dynamically to thoughtfully consider odds, edges, and optimal sizing for investment decisions. This discussion highlights the various personas or strategies that investors can adopt in dealing with both the winners and losers in their portfolios. Many of the concepts discussed in this episode are the research and works of others. Manar talks through how we think about applying their lessons dynamically and from a first-principles basis to the day-to-day management of portfolios at Mawer. Key points from this episode: Lessen the emotional impact of a large loss on a single position with position sizing Use the Kelly Criterion to determine the optimal size of a bet, taking unpredictability into account Resist the instinct to embrace either nihilism or precision in investment decision-making Tailor position-sizing approaches to your own investment style and risk tolerance
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Playing the plan: Mawer's International equity portfolio | EP150
03/06/2024
Playing the plan: Mawer's International equity portfolio | EP150
Portfolio Manager Peter Lampert breaks down the decision to re-open the strategy to new institutional investors and the key inputs that determine the strategy’s capacity. In addition, “a tale of two acquisitions”: one head scratching, the other improving the investment thesis of the holding. Key Points From This Episode: Breaking down the decision to re-open the strategy to new institutional investors How the team determines the strategy’s capacity A puzzling acquisition by KDDI and a potential value creating acquisition by Novo Nordisk Evaluating the implications of rising interest rates on real estate investments The balance needed to sift through the hype around AI while still being open to opportunities Host: Rob Campbell, CFA, Institutional Portfolio Manager Guest: Peter Lampert, CFA, Mawer Portfolio Manager For more details and full transcript visit: [episode link] This episode is available for download anywhere you get your podcasts. -- Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at . Follow us on social: Twitter - LinkedIn -
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Post-Mortem: Learnings from 2023 | EP149
02/29/2024
Post-Mortem: Learnings from 2023 | EP149
In this episode, host Rob Campbell and 11 colleagues on the research team engage in a comprehensive post-mortem analysis, sharing candid reflections on their decision-making processes over the past year. This episode underscores the significance of learning from both successes and mistakes, highlighting the value of vulnerability and introspection within the investment team at Mawer. A Few Highlights: • Investing before comfort in competitive markets is necessary for returns • Less complexity in investment strategies often results in more alpha • Significant market changes can take longer to affect companies than expected • Large acquisitions are risky; patience in evaluation is key • Leaning harder on inductive evidence and numbers for decision-making • Understanding the importance of parent companies in investment decisions • Finding a balance in analysis depth to retain key insights without becoming lost in the details Host: Rob Campbell, CFA, Institutional Portfolio Manager Guests: Christian Deckart CFA, PhD, Mawer Deputy CIO, Portfolio Manager Mark Rutherford CFA, Mawer Portfolio Manager Grayson Witcher CFA, AB, Mawer Portfolio Manager John Wilson CFA, Mawer Portfolio Manager Samir Taghiyev CFA, Mawer Portfolio Manager David Ragan CFA, Mawer Portfolio Manager Siying Li CFA, Mawer Equity Analyst Jeff Mo CFA, Mawer Portfolio Manager Curtis Elkington CFA, Mawer Credit Analyst Peter Lieu CFA, Mawer Portfolio Manager Asim Hussain CFA, Mawer Equity Analyst For more details and full transcript visit: [episode link] This episode is available for download anywhere you get your podcasts. -- Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at . Follow us on social: Twitter - LinkedIn -
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Introducing: The Mawer Global Credit Opportunities Strategy | EP148
01/31/2024
Introducing: The Mawer Global Credit Opportunities Strategy | EP148
In this episode, newly appointed Fixed Income Portfolio Manager at Mawer, Brian Carney, shares his insights on global credit strategies. With over 30 years of experience in the investment industry, Brian discusses his career journey, the evolution of credit markets, and his perspectives on current market dynamics. He highlights Mawer's approach to managing credit risks and opportunities, detailing the new Global Credit Opportunity Strategy at Mawer. Key Points From This Episode: Brian Carney's extensive background in finance and credit markets The evolution and current state of global credit markets Introduction of Mawer's Global Credit Opportunity Strategy Approaches to managing risks and capitalizing on opportunities in credit Insights on fixed income strategies and market dislocations Mawer's unique position and strategies in the investment landscape Links:
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Global Equities: Moneyball, Weighing Decisions, and Finding an Edge | EP147
01/24/2024
Global Equities: Moneyball, Weighing Decisions, and Finding an Edge | EP147
In this episode, Manar Hassan-Agha, co-manager of the Global Equity Strategy, joins host Rob Campbell to discuss applying the 'Moneyball' process in evaluating past investment decisions. They unpack the lessons learned from this approach, emphasizing long-term thinking in investment strategies. The conversation highlights critical insights from the Moneyball statistics, the importance of decision quality over short-term results, and the value of inactivity in investment management. Key Points From This Episode: 'Moneyball' approach to evaluating investment decisions in global equity Importance of long-term thinking in investment decisions Understanding decision quality beyond immediate results The role of inactivity and patience in successful investing Insights from specific case studies, including Couche-tard and Wolters Kluwer Reflections on past investment choices and their long-term impacts Discussion on asset intensity in portfolio risk management Links:
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Quarterly Update | Q4 2023 | EP146
01/16/2024
Quarterly Update | Q4 2023 | EP146
In this episode, Kevin Minas sits down with Crista Caughlin, Lead Portfolio Manager at Mawer, focusing on the key economic developments of Q4, including growth levels, inflation trends, and the resilience of financial markets. They speak on the nuances of the Canadian bond strategy and the impact of these economic factors on portfolio management. Key Points From This Episode: Volatility in Q4 with notable declines in interest rates and inflation Marginal changes in growth, with a slight downturn in Q4 Economic resilience despite rapid interest rate increases in 2022-2023 Inflation trends: a reversal in Q4, with rates moving lower than in previous quarters Equity markets showing solid returns, led by large-cap tech companies Fixed income market volatility and changes in central bank policies Anticipated re-emergence of traditional correlations between bonds and equities Adjustments in asset allocation within Mawer's balanced portfolios Links:
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EAFE Equities: Japan, Interest Rates, and Managing Volatility | EP145
12/07/2023
EAFE Equities: Japan, Interest Rates, and Managing Volatility | EP145
In this episode, Dave Ragan, co-manager for the EAFE large-cap strategy, speaks on the current state and future prospects of EAFE markets. He delves into Japan's market challenges and opportunities, examines the impact of global interest rates and economic conditions, and explores the decision-making processes in market volatility. Key Points From This Episode: Japan's historical challenges and current state in the EAFE portfolio Chugai Pharmaceutical: A recent addition to the portfolio Market dynamics in 2023: Interest rates and soft landing possibilities Stock reactions to market volatility and decision-making process Case studies: Nova Nordisk's success and Adyen's challenges Risk management and diversification strategies in the EAFE portfolio Links:
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Emerging Markets: Recent Rebound, China, and New Opportunities | EP144
11/23/2023
Emerging Markets: Recent Rebound, China, and New Opportunities | EP144
Portfolio Manager Peter Lampert dives into the world of emerging markets, sharing what’s changed for the portfolio since last year, insights on where we’re seeing new opportunities (e.g., Brazil), and the impact of geopolitical risks in Eastern Europe. He also explores why we’ve reduced our weight and exposure in China and what a slowdown in emerging markets might mean for investors. Key Points from this Episode: Main drivers behind the portfolio’s rebound in performance from 2022 New additions from Brazil: Petro Rio, GPS, XP China’s increased risk profile and potential implications for emerging markets Softening demand and slowing global growth Links:
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Beyond AI: Other Technology Trends | EP143
11/09/2023
Beyond AI: Other Technology Trends | EP143
Today on the podcast, Equity Analyst Michael Vogel discusses the importance of analyzing technological shifts beyond artificial intelligence and how these shifts can impact non-tech companies in the portfolio. Michael emphasizes the cultural approach to holding views lightly and shares examples of how the Research team navigates these changes. Key Points From This Episode: - Tech changes, non-tech companies adapting, potential shifts - Image sensors improve, and Kodak sales rise steadily - Electric cars and gas stations coexist profitably - Positive impact of legal software and AI - Analyzing investment matrix, tech shifts, and shared research Links:
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Quarterly Update | Q3 2023 | EP142
10/17/2023
Quarterly Update | Q3 2023 | EP142
A recap of the quarter and our thoughts on the hard vs. soft landing debate. Highlights: Main drivers of the market pullback Inflation’s persistent “stickiness” and potential implications of “higher for longer” interest rates How are consumers faring? Asset mix update Looking ahead—what’s on our radar
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Canadian Equities: Inflation, Interest Rates, and Decision Making | EP141
10/12/2023
Canadian Equities: Inflation, Interest Rates, and Decision Making | EP141
Main themes impacting the portfolio and the benefits of systematically tracking investment decisions. Highlights: Valuation considerations in a higher rate environment How (and why) we’ve started systematically tracking and analyzing our investment decisions Portfolio adjustments—adding AltaGas, exiting Enbridge and Agnico Eagle Quick dive into Dollarama’s business model and some of the stock drivers
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U.S. Mid Cap Equities: Tech, Regional Banks, and Valuation | EP140
09/20/2023
U.S. Mid Cap Equities: Tech, Regional Banks, and Valuation | EP140
A look at the strategy a year on and why we think valuation should be more top of mind for investors. Highlights: Influence of big tech stocks on the U.S. market and associated impacts to the small and mid cap space The AI theme continues—Elastic, Concentrix, Moderna Why is the U.S. market more expensive compared to its developed market peers? Regional banks—what happened, the current state, and opportunities (e.g., First Citizens Bank) Identifying potential economic themes through a bottom-up lens—Insperity, Dollar General, XPEL Some of the recent main performance drivers for the strategy—Winmark, Copart, Verisk, FLEETCOR, Global Industrial, Donnelley Financial
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Global Equities: Scuttlebutt, Reverse Roadshows, and Bathroom Lists | EP139
08/24/2023
Global Equities: Scuttlebutt, Reverse Roadshows, and Bathroom Lists | EP139
How we approach finding new ideas in the widest investment universe. Highlights Eagles and vultures mental model—why idea generation is better enabled by one shared investment philosophy and knowledge base E.g., Novo Nordisk and Publicis What is the “Bathroom List” and its role in our investment process and ESG considerations—e.g., JDE Peet’s Why nuance matters when incorporating scuttlebutt—e.g., Publicis How we’re continuously refining and improving our processes Current emerging markets exposure A walk through our qualitative risk assessment checklist Recommended reads from Manar
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Vulnerabilities vs. Triggers | EP138
08/02/2023
Vulnerabilities vs. Triggers | EP138
Unpacking one of our key mental models around investing and managing risk. Highlights: What we mean by “non-predictive decision making” Examining the question, “what’s your outlook and how you are positioned accordingly?” through a non-predictive decision-making lens The important difference between vulnerabilities and triggers Vulnerabilities we’re paying attention to
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Quarterly Update | Q2 2023 | EP137
07/19/2023
Quarterly Update | Q2 2023 | EP137
Market drivers that stood out this quarter, where inflation is at, and an asset mix update. Highlights: How markets have been climbing a “wall of worry” Recalling Cisco Systems and considering implications around the current concentration of tech stocks in the S&P 500 Our thoughts on the continuing rate hikes and “soft landing” scenario Holding cash: what’s changed?
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International Equities: Insights from the Road | EP136
07/06/2023
International Equities: Insights from the Road | EP136
Top highlights from the team’s recent research trips and a few business models we’re excited about. Highlights: Insights from visiting Norway, the Netherlands, Kazakhstan, India and some holdings—Equinor, AutoStore™, Ahold Delhaize, Adyen, Genmab, Kaspi, Weir, HDFC Bank Why we’ve been reducing our weight in China and our current thinking around regional exposures The unique competitive advantages of Compass Group and Chugai Current and future implications of AI for the portfolio and different business models—NVIDIA, TSMC, ASML, Samsung, RELX, Wolters Kluwer, Teleperformance
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Global Small Caps, Engaged Owners, and Reverse Roadshows | EP135
06/21/2023
Global Small Caps, Engaged Owners, and Reverse Roadshows | EP135
A deep dive into key themes we’ve been focusing on, recent additions to the portfolio, and a few changes. Highlights: Quick recap: What has changed with the portfolio since 2022? What we mean by “engaged owners” (and the difference they can make) Why we are looking for companies with lower duration How we try to find a variant perception from the market—and some examples Recent additions to the portfolio: Dermapharm, Donnelley Financial, Hikma, Ipsos, SoftwareONE, and Technogym Our new approach to the reverse roadshow process
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U.S. Equities: ChatGPT, Banks, and Earnings | EP134
05/24/2023
U.S. Equities: ChatGPT, Banks, and Earnings | EP134
Why management teams matter, energy companies rarely meet our investment criteria, and JPMorgan and State Street differ from many regional banks. Highlights Potential implications of the recent advancements in generative AI U.S. regional banking challenges and our exposure Why we don’t currently own any energy sector companies in the portfolio A look at two holdings—one “old” and one new—Verisk and BorgWarner Our observations on broader earnings results
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The Epistemology of Investing: A Near Insurmountable Challenge | EP133
04/27/2023
The Epistemology of Investing: A Near Insurmountable Challenge | EP133
Why genuine knowledge building and the ability to learn effectively in investing is difficult, and how we try to work around those challenges. Highlights: Context setting: What does “epistemology” mean, and why did we get excited about it in relation to investing? What is knowledge? How do you create it? The two founding blocks: Inductive and deductive reasoning A contrast in knowledge approaches and evolutions—e.g., the airline industry vs. astrology The resonance behind the learning, trying to “win by not losing” How we aim to build knowledge by “closing the loop” on inductive learning: Journaling, timestamping, governance (and the Mawer Lab) Forecasting tournaments and “adjacent games” Also: Learning isn’t cost free Drawing from the wisdom of crowds—what conditions help foster learning within an organization? ChatGPT and AI: Potential implications for the learning process in investing
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Quarterly Update | Q1 2023 | EP132
04/19/2023
Quarterly Update | Q1 2023 | EP132
The major themes of the quarter, where we are in the interest rate hike cycle, and our thoughts on the recent banking crisis. Highlights: The slow-moving impacts of central bank policy on inflation Our banking exposure Why it’s important for investors not to fear recessions Asset mix update
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Canadian Small Caps, Energy, Risk Management, and Assessing Management Teams | EP131
04/12/2023
Canadian Small Caps, Energy, Risk Management, and Assessing Management Teams | EP131
This episode, we discuss our seven-point management assessment framework (with examples), our risk management approach, and overall thoughts on energy. Highlights: Why it’s difficult to find energy companies with sustainable competitive advantages—and where we see some opportunities—e.g., Parex Resources and International Petroleum Corporation Another way to look at geographic diversification? Revenue profiles in the portfolio (e.g., Jamieson Wellness Inc.) Diving into our Management Assessment Framework (MAF) and how we use it to determine if a management team is effective—E.g., Uni-Select and Element Fleet Visiting each floor of “The Mawer Risk Elevator”—and why the decision-making environment is the foundational level How rising interest rates can impact wealth creation
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Emerging Markets: What happened in 2022, and where are we at? | EP130
03/15/2023
Emerging Markets: What happened in 2022, and where are we at? | EP130
Digging into last year’s performance drivers, the current opportunity set, and benefits of resuming boots-on-the-ground research. Highlights: A review of the market and our strategy’s performance in 2022 and three key learnings Why we exited Kakao, and some of the new additions to the portfolio: Salik, Vesta Risks we’re monitoring—and managing: China-U.S. tensions over Taiwan and geographic exposure in the portfolio The power of pricing power (see: TSMC) and types of ESG considerations that we look for in our investments (Petro Rio) How a shared investment philosophy and process makes for better decision making—e.g., Lonza, Hikma
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Inflation’s One-Two Punch | EP129
03/01/2023
Inflation’s One-Two Punch | EP129
The nuanced impacts of inflation to companies’ balance sheets that investors might be missing. Highlights: How inflation can present major challenges to businesses Why investors need to look more closely at maintenance capital expenditures and depreciation expenditures—e.g., Dollar General A return to accounting basics and monitoring inventory balances—e.g., Johnson & Johnson
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Post-Mortem: Learnings from 2022 | EP128
02/22/2023
Post-Mortem: Learnings from 2022 | EP128
Chief Investment Officer Paul Moroz shares takeaways from the Research team's annual post-mortem discussions. Highlights: The cyclical—and long-term—aspect to investment learnings Why interest rake hikes were a big factor and topic of conversation “Fishtailing” and the difficulties of trying to right-size information How emotional intelligence makes for better decision making “Simplify, clarify, focus” and offsetting the toll of complexity in processes
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Is the 60/40 Portfolio Dead? And more fixed income questions answered | EP127
02/08/2023
Is the 60/40 Portfolio Dead? And more fixed income questions answered | EP127
Portfolio Manager Crista Caughlin walks listeners through the tumultuous bond market experiences of 2022 and outlines three main economic scenarios the team is monitoring for 2023. Highlights: Are reports of the 60/40 portfolio’s death greatly exaggerated? 2022 recap: What happened in bond markets? How can the yield curve un-invert? Key takeaways from researching Canadian household debt levels Adjustments to the portfolio: What changes have we made?
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Europe, Energy, ESG: Observations from the road | EP126
01/25/2023
Europe, Energy, ESG: Observations from the road | EP126
Some of the main challenges facing the continent, what we gleaned from visiting over 45 companies, and ESG considerations that are front of mind for major European investment firms. Highlights: Our thoughts on the prevailing macro concerns—e.g., inflation energy crisis “Collective corporate memory” and why the history of Europe is an important and unique context—particularly seen from a bottom-up perspective (e.g., Kuehne+Nagel, Lonza, Givaudan, SGS, Reckitt, Anglo American, Roche) Differentiation and operational effectiveness—what makes our European holdings competitive (e.g., Anglo American, Kuehne+Nagel) Germany’s longer-term energy outlook and potential implications for energy transition and infrastructure in Europe (e.g., Iberdrola, Shell, Equinor) ESG conference takeaways—the importance (and difficulty) of parsing and aggregating unstructured data, particularly for social considerations, and how we incorporate this into our investment process
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Quarterly Update | Q4 2022 | EP125
01/16/2023
Quarterly Update | Q4 2022 | EP125
A review of last quarter, the major themes and takeaways from 2022, and what’s on the horizon for the new year. Highlights: How we did—and what factors impacted relative performance Why 2022 was difficult for Balanced investors Discount rates have gone up…where are valuations at? Inflation expectations, interest rates, labour markets, earnings, and economic growth—what’s being monitored in 2023 Asset mix update
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S-Curves and the Adoption Cycle | EP124
12/28/2022
S-Curves and the Adoption Cycle | EP124
What investors can learn from the s-curves of technologies both old and new. Highlights How S-curves relate to TAM (total addressable market)—and what piqued our interest about them in the first place Types of S-curves Where different technologies fall into an S-curve: E.g., cars, refrigerators, landlines, TVs, Kindles, USB ports, and biologic drugs Are S-curves getting steeper?
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Playing the plan: Mawer’s Canadian equity portfolio | EP123
12/14/2022
Playing the plan: Mawer’s Canadian equity portfolio | EP123
What we think about the newly proposed tax on share buybacks in Canada, a balanced take on the energy theme, and where we’ve trimmed, exited, and added in the portfolio. Highlights: Which sectors may be most affected by the buyback tax Holdings that showed strong fundamentals throughout this year’s volatility—e.g., Canadian Natural Resources, Suncor, Loblaws, Dollarama, and more Canadian real estate recap—e.g., Choice Properties and Granite REIT How we approach assessing big C-suite changes (CN Rail, Suncor, Bank of Nova Scotia) Major themes the team is thinking about for 2023
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