Chit Chat Stocks - Acquisition Mania (Roku, Salesforce, And More); Catching Falling Knives; New Small Cap Stocks

Episode Date: June 19, 2026

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. This week we discussed: (00:00) Introduction (01:17) Roku's Acquisition by Fox Corporation (10:09) TripAdvisor's Sale of The Fork to American Express (20:55) Exploring the Denmark Index and Investment Opportunities (34:19) Accenture's Dividend Yield and Cash Flow Stability (35:49) Fiserv Executive Departures and Investor Concerns (41:17) Small Cap of the Week: Spectra Systems (47:09) Legacy Education: A Healthcare Roll-Up Opportunity (51:00) Salesforce's Acquisition of Fin (56:14) Snap's New AR Glasses: A Critical Look (01:01:10) Autodesk: Evaluating Investment Potential ***************************************************** Subscribe to Emerging Moats Research: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

For the past three years, IBKR individual clients averaged 24.3% annually, beating the S&P 500's 23.1%. Lower costs and 170-plus global markets matter. Interactive brokers, member SIPC, visit ibkr.com slash performance. Welcome to Chit Chat Stocks, the podcast that helps you find your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined, as always, by the one and only Brett Schaefer. This is our weekly Investing Power Hour episode. We do these live on Thursdays at 5 p.m. Eastern time on YouTube.

So if you ever want to ask us any questions, head on over to YouTube, look up Chit Chat Stocks, 5 p.m. Eastern time on Thursdays, and throw them in the chat. But on this show, we talk all things financial markets. We've got tons of news this week. A lot of headlines in the M&A world, a lot of acquisitions, a lot of spinoffs, potential opportunities in there. We've got a lot of requests from the Emerging Motes chat, which is totally free, by the way, to go check out and ask any comments. And so a lot of questions, a lot of stuff from the audience. We've got a small cap of the week that I find actually pretty enticing.

And then we have two companies – actually three companies now sort of on the hot seat in turmoil. The CNBC headline, Markets in Turmoil. I think maybe there's a few companies in turmoil this week that we can talk about. But I'll leave it there. Brett, what do you want to start with? That's a good question, Ryan. why don't we talk about let's talk roku one of the 2021 flame of ours yeah we've been following this for a long time it's kind of one of the ones we'd look at when we were novices out there

2021 2021 darling i think it's getting bought out well below 50 percent uh from its all-time the highs take us through the details here what is fox doing with roku yeah so so roku i guess our thesis way back when was that it'll be sort of the operating system for smart tvs the leading operating system and i would say honestly that thesis has played out for the most part like they are still the leading operating system they they don't report active accounts anymore but they They are the leader in active accounts and streaming hours has continued to rise. However, it hasn't necessarily translated to success or any real operating income inflection. I mean, it's been I think the business has been fine, but maybe not what we were expecting.

Anyways, news came out this week that Fox Corporation – yes, that is Fox, the parent company of Fox News, Fox Business, Fox Sports under the FS1, FS2 brands, I think a few other notable networks – is acquiring Roku for $22 billion in a cash and stock deal. Shares of both companies dropped on the news. I don't know if I've ever seen both companies – well, Roku jumped slightly, I should say, but then the next day it dropped. It was just a little bizarre, but it wasn't really quite the premium I think Roku investors were expecting. So it was just over a 30 percent premium to where Roku's shares were trading, and I'm checking the stock price now. I actually had the timing wrong. uh roku shares did jump on the news but not by a whole lot there's still i guess before we get into the implications of this deal why fox is trying to acquire roku i will mention that there

is still a spread between the current share price about 138 dollars and what the acquisition price would go through at which i believe is around 160 dollars per share so if you're if you like the merger arb world this could potentially be interesting i also there's some political dynamics i have doubts that uh the current administration would would really try to block this deal but uh maybe i don't know all the workings there why are they making this acquisition so they didn't explicitly lay it out but i think you can probably make some assumptions fox is basically a tv network business that has for a long time relied on linear tv linear tv obviously if you haven't been living under a rock it's sort of in structural decline uh probably has been for

the better part of a decade and in theory if they own the leading operating system in the smart tv world they could give themselves sort of priority placement for their first party content and there's probably some other kind of hidden benefits there as well but the follow-up question for me is i guess first the two-part question for you brett does this acquisition make sense and then if fox owns roku do you think roku gets less demand from other content players because right now they generate most of their revenue through advertising from the netflix's of the world or the disney's of the world if it's owned by fox is there sort of a conflict of interest there with other parties yeah that's fair to have on the last part there i don't think it would be the end of

the world you're also still doing your revenue share agreements which is not as large of a business or part of the business anymore i think the acquisition makes sense they want to get into okay well fox also owns to be i think they all have strange names but one of the ad supported streaming channels roku channel is really dominating in that and if you can just funnel a bunch of that ad supported um i don't want to call it slop content but reruns stuff like that through to be roku channel things of that nature you layer on roku's advertising technology which i always think these type of things are overrated uh they say oh we have these anti-walled garden targeting capabilities all right we'll see everyone seems to still want to

just spend on instagram i think that is it makes sense and the stock wasn't at a super expensive multiple when you look at like a gross profit or revenue basis i'm sure they're not as profitable as they could be i like it i don't know if i would buy a fox because look they're still in structural decline but it's very smart for them to acquire roku because you get all these households you get the distribution it's a bit like a move of a comcast acquiring oh what do they acquire mbc universal it's kind of in a similar vein but almost the opposite like the opposite person is acquiring and i think it totally makes sense because if you're going to compete with a netflix or a youtube or even amazon prime or an apple who have different budgetary concerns if you're

going to really compete with netflix or youtube you're going to need some sort of advantage i think this makes perfect sense for them if you're looking at someone like disney i kind of would worry that this is another competitive threat coming at you in the streaming tv space look that's not really where your your profits go from parks and experiences and things like that but you still need people you still need to be very relevant within streaming tv and tv in general and if disney has a larger competitive threat with a roku combined with fox yeah i'd be slightly concerned so right now fox over the last 12 months fox has done 16.2 billion dollars in revenue can you guess what they were how much they were generating revenue 10 years ago

who sorry well fox fox they're currently generating 16 billion can you there might have been a spin i think they separated parts of the business correct sold it to disney sold some of the content studios to disney yeah let me was this after the spin i believe it's post spin okay well keep this in mind we could be we could be using uh not apples to apples here i have no clue what the revenue is 30 billion 20 eight eight what does that say no eight billion well nine billion in 2016 so they've doubled revenue over the last 10 years basically to be gotta love to be operating income i believe is about flat let me see if i can get yeah well there's been a big drop this year but operating

income has barely budged i think part of that is that the in the fox sports world i would imagine you're constantly bidding more for the sports rights so even if your revenue grows your content costs might be growing or outpacing that growth as well the i think it makes sense from fox's perspective honestly um there's a lot of value in owning that distribution arm i think roku probably has i want to say 100 million active accounts i could be getting that they don't report it anymore but that's roughly right i think they're north of 100 million yeah yeah Last it was reported was 90 million in 2024. So you could guess that they've continued to grow. I think this is I would be disappointed if I were a Roku shareholder. But for Fox, I think it makes sense, which is a little bizarre because Fox shares are down, I want to say, 15, 20 percent on the news. so yeah i still don't want to own anything in the media space the traditional media space

this maybe we can look at what the numbers are combined but even merger are possibly if that's your game but the combined businesses i still think it's just hyper competitive and you're going up against the youtubes of the world for example with the world cup i know in the united states on fox but in brazil there was a uh i think a traditional tv newscaster but there's also just a youtube channel that got the rights somehow i don't know if it's a shared thing or if everyone has the rights to the world cup they have 30 million people watching that so that is i think long term it's just going to get more and more and more competitive this is a defensive move but why would i want to invest in a company that's forced to play defense as not one of the scaled

players it's tough all right we have listener comments here someone says uh gosh what do you think well they want us to talk about spacex another one someone chris says please no spacex talk we are gonna have a rule to not talk much spacex at all going forward i'm sick of it covering it at The Motley Fool as well as it's all over CNBC. We talked about it a bunch leading up to the IPO. But we did have a listener ask about why do you think the stock popped?

Essentially, it's pretty simple. There was a lot more buyer demand than that could get into the IPO. A lot of people chased after it the few days after it got public, and now it's probably going to slowly bleed

over the next few years. And it's about MySpaceX update. Yeah. I definitely don't want to talk about SpaceX stock price movements because we're probably going to get the chance to do that just about every week for the next year would be my guess. But yeah, there were some interesting developments, I guess. Well, they signed a deal with Google. That's slightly old news. uh tyler asked why did they why did google sign that deal my guess is spacex offered them cheap compute is the answer and there's a lot of opt-out clauses i believe i think they have like a 60-day opt-out clause at any point if i'm not mistaken so here's another note uh alphabet google they own spacex shares worth about 100 billion dollars and if they can get the stock price elevated until they can dump it not a bad move right and this can help them get there yeah that's true um but i

and the other news i guess is they're making one of the biggest private acquisitions of all time potentially at least on the face face number their 60 billion dollar acquisition of cursor i think the actual name is something else but cursor is the customer facing name do you know anything about cursor i don't either do i they're just trying to spin up revenue growth i think it's about it we've talked two minutes on them maybe is that is that too long here should we go on to another question too long yeah yeah and then chris chris also says in the chat uh guessing roku is mainly prominent in the u.s yes i believe it mostly is here in the u.s most of their active accounts are but i could not name a single original piece of content that they produce

i don't think they really do produce much original content uh i think they bought the quibi library for like a million bucks but that's about it they just throw stuff onto the ad supporting like they okay for example uh what's a popular rewatch movie that people have like inception something like that christopher noel movies people toss those on the roku channel they get them on there they load it up with a bunch of advertisements and you can watch it for free but that's how they make the money all right do we want to talk more m&a news there's a few that we can rip through so brett you tell me which one interests you the most we could talk salesforce trip advisor pizza hut trip advisor first pizza hut yeah no pizza trip trip advisor i think this is it's the smallest

acquisition of the news headlines from this week but it's probably the most actionable for my portfolio would be my guess so uh the news is trip advisor is selling the fork which kind of a funny name but the fork to american express for 700 million dollars the fork for those over here in the u.s uh is the leading restaurant reservation platform in the europe in europe and the uk they have an estimated 10 market share open table or resi for europe pretty much yeah and american Express owns Resi, correct? Correct. Yeah. Okay. So I guess this will be similar for the UK market or the EU market. And the business has actually been in pretty solid shape. So I've got a chart pulled up here, Brett, maybe you can share it. But revenue has grown at 16% a year for the fork,

the division under TripAdvisor, basically since pre-pandemic. And they've just turned the corner to, again, take this with a grain of salt, but adjusted EBITDA positive. They're now at about 10% adjusted EBITDA margins for that business. So $232 million in revenue, decently sized business here. American Express is basically buying them for three times revenue. I think as an American Express shareholder, I think you should probably be excited about this. Honestly, there's a lot of tie-ins that they can do with these reservation platforms and ways to kind of make you feel prestigious if you're an american express card holder by giving you priority reservations and stuff like that yeah and for what they did with the refresh on their latest both of the flagship

cards platinum and gold is you now get resi like kickbacks for the united states customers every quarter so i think you're platinum you get a hundred dollars every quarter now the fork is based in europe so it makes sense for them if they want to try to gain their market share in europe they can build a better loyalty program if they own the fork and it already seems like a decent business yeah and the the part that i guess excites me is if you look at the remaining trip advisor company i think it's pretty attractive here so the rest of what's under the trip advisor portfolio is trip advisors legacy brands which are basically connectors for hotel bookings which is in structural decline so basically in runoff but then viator is in there as well which is the

leading experiences platform which airbnb is making a big push in there and there's been some rumors that potentially airbnb could be vying for that business definitely not dropped TripAdvisor or they're activists. They're not trying to get that narrative started. Airbnb, buy this. Airbnb is thinking, why would we do this? But hey, it could be a good way to make some money as a shareholder. Yeah. So Viator and the legacy TripAdvisor businesses, so stripping out the fork, they generate about $1.8 billion in revenue and $270 million in adjusted EBITDA combined, those two businesses. TripAdvisor recently had an activist investor come in. I think it's Value Act Capital was, I believe, the name of them. And I suspect they were the ones

really encouraging the spinoff here. If they're getting $700 million in cash, TripAdvisor has a $1.4 billion market cap today. And I think they've got about $100 million net cash on the balance sheet so you're looking at 1.4 billion market cap 800 million in net cash the ev to remaining ebita is about three times which and now keep in mind just ebita it's adjusted it's not cash flow so you know do your own work here but it looks pretty cheap and if they choose to they could take out a ton of their shares they've got more than half their market cap in cash with if this uh once this acquisition would go through i assume it's an all cash deal i didn't check but i i should probably double to check that i think i think

it's definitely all cash but yeah let's say we're not 100 certain there the yeah buy a tour could be worth a billion or two two billion right it could be worth more than its entire market cap today so you could get a nice sum of the parts realization here and the fact that they already sold the fork may just be the catalyst you need where you go oh okay they're actually thinking of getting rid of everything and just trying to realize some value here where before the activists had come in i think it's maybe at some point over the last 12 months there have been talks management says we're listening blah blah blah but we're actually seeing action now so this could make it a much better risk reward. Not saying I'm looking at TripAdvisor closely, but this could be

a much better risk reward now that we know they are willing to sell Viator or the fork. You research your investments, you analyze markets, you manage risk, but did you research your broker? For the past three years, IBKR individual clients averaged an annual return of 24.3% compared to 23.1% on the S&P 500. IBKR's lower trading costs, competitive rates, efficient execution, and access to more than 170 global markets helped investors keep more of what they earn and put more capital to work. Over time, the broker you choose matters.

Interactive Brokers member SIPC. If you care about performance, find out why the best informed investors choose Interactive Brokers at ibkr.com slash performance. Yeah. I mean, if this – it's worth more dead than alive potentially here. Yeah. And TripAdvisor is – it's dying. It's OK. It's – Yeah. I think there's a chance for investors to make – potentially double their money in short order. Again, I don't think this is – assuming that this becomes spinoffs and cash returns type story to shareholders. right things need to go right it's not a couple of steps need to be had but this is one of them

yeah the word the last thing you want right now is a management team that thinks they can revive the business that's you you don't want them to be too aspirational we're pouring money into the core trip advisor brand to try to regain market share from uh who wikipedia or not wikipedia expedia i don't even know what trip advisor competes with that's that's a business i never even knew you get those lists of 10 things that just seem wrong for your trip you're like here are 10 things to do and it's like i my gut says these are actually scams uh yeah but what anything else before we move on to another topic no the only other thing i could potentially be interested in is if somehow they're able to spin off the legacy trip advisor business and you get the

remainder which is just viator i think viator on its own is worth a lot more than the current market cap so toss tripadvisor to a pe firm something like that let them i just don't know who's really gonna buy well for how much it depends on what price you could juice it for i mean people made money still make money owning yellow pages it's just 99 smaller than 25 years ago so at the price uh yeah who knows all right we got more international listeners maybe it's the world cup everyone's interested in the united states now hey guys from norway been falling for a while and appreciate your work especially now that is a great case that would never appear on my radar yeah we have some other under the radar stocks we want to cover on this show today i will

say on emerging modes i wrote a detailed uh write-up on nelnet we have some other listener questions here maybe we can get to later if we have time can we go through ryan there's some stuff from last week that listeners recommended that i didn't get to first one here is the denmark index uh detailed from kender here had a detailed note in the substack chat he says fishing where no one goes here in denmark we have a small index of just 25 companies but mares is in twice so it's really 24 we don't have tech we don't have a lot of growth but we have high quality companies it used to be one of the best indices indexes we need to really figure out if it's if that's interchangeable but i thought about it by the way i think they're both it both fits usable um in

indices i i believe is like a group of indexes okay all right and what about indexes so indexes is it's like another layer down all right i remember i remember writing something about it and i was like wait there's a use case for both of them i'm forgetting now but it'll let's from this point forward we're going with indices i like saying indices indexes feels low class we got to be professional as possible here on this diy podcast yeah uh okay back to the denmark index the past couple years has been one of the worst it's also pretty cheap and pays a big dividend the capital markets have been dead here but we just had our first ipo in four years a juice company at three million dollars well congrats it's about 0.01 percent the size of

spacex uh i kid that's i mean this is where you can kind of fish where no one's looking south korea i guess japan's larger taiwan denmark places like that where you should have good business rule of law hopefully and maybe you can find some diamonds in the rough that no one's looking at it uh to finish it off here i don't own it myself but it's a basket of non-tech and hard to disrupt value one of the best currencies in the world i do think it add value compared to a tech usa high beta portfolio should we look at some of the largest companies i should have pulled up the screener i did this last week maybe yep still on there thank you to our friends of fiscal ai uh the screener was pre-loaded we can start maybe we'll just go the top 10 largest companies

here and anything that pops out to you first up here one that many people will know novo nordisk 200 billion dollar market cap that's i think dragging down the index a ton yeah interesting uh i don't really have necessarily a strong opinion on novo nordisk here it seems like eli lily is becoming more and more competitive but again who knows i think once you get used to taking a drug there's or recommending a drug as a physician, there's some risk in switching. Sure. That's fair. And I don't think the weight loss drug competition, well, one, it's a huge rising tide that's going to lift everyone. But two, I don't think the competition between these two companies and others is over. It's still a very

new industry. It's only been five years. There could be new innovations. Novo Nordisk was the high in here i wouldn't completely write them off here's another one on the list carlsberg beer company uh craft and specialty beers you out or in the europeans according to these videos we're seeing in the world cup they drink a lot more than the u.s people so maybe you want to be europe focused when it comes to alcohol the data would relatively speaking they might drink a lot, but compared to 10 years ago, do they drink a lot? I'm not sure. I'm pretty sure they've seen beer volume declines. I'll double check. Yeah, you check that. I'll give you some of the basic stats here. Revenue, three years, 8%, five year, 9%. This is annual growth, 10 year, 3%. Obviously,

there could be some spins or acquisitions there. Dividend yields, 3.4%. 10 year dividend growth the 12.4 percent uh trailing pe 18.6 forward pe 12.3 not as cheap as you'd maybe like for a non something that you don't think is going to grow much above inflation but maybe they're i would expect more of a discount is kind of what i'm saying if this is a hidden gem on the danish market what do you want to look at beer volume in western europe their beer volume in asia or like just their overall total global total global let's just do that it is down i would guess probably around 20 percent over the last six years uh down down about 12 percent since 2019 beer total beer volumes and western europe in particular

has they must have spun something off because it's almost been cut in half beer volumes yeah there's probably something in there but again you're i know it's the world cup everyone's celebrating and people are drinking a lot of beer but it's a you're you're fighting a headwind here in terms of volume even i know it's one of those things where you get anecdotes in in real life and you make it makes you feel like there's volume growth but it there's not uh globally and this is across pretty much every market alcohol consumption is declining yeah we talked about this before the big question is do you hit a bottom or is it a new secular trend

it's very hard to say i think at some point you normalize it's not going away it's been around with him it's for thousands of years like this is not sure it would be i think a little egotistical to make the claim alcohol is going away like this moment but where is the floor that's where investors are concerned right it's i mean look people still smoke cigarettes but they've shed volume every year for 30 years yeah now if that's the comp maybe it is a good investment because the returns have still been all right but that's fair that's fair uh yeah they have some other ones in here pandora also another struggler lab grown diamonds i don't i really do not want to mess with jewelry maybe pandora has less like diamond ring exposure but

But that feels like a huge headwind for places like Tiffany's owned by LVMH. Pandora could be interesting. We're at P.E. of 10. Maybe take a look at that. In general, I'm not necessarily buying – you're buying the basket. You're buying Denmark broadly. Now, a lot of these are global businesses, so the constituents matter. But I think if I were looking to buy one of these ETFs based on this index, it would probably be just like geographic exposure outside the United States.

And all these companies you've mentioned, it seems like they've got a little bit of hair on them, a little bit of risk. Maybe some of them are seeing sort of headwinds, but they all look fairly cheap probably, at least the ones you've mentioned. pandora novo nordisk uh here's the last one i have for you that might uh get you a little more excited scandinavian tobacco group pe according to fiscal ai again use our link fiscal.ai slash chit chat get 15 of any paid plan most of the data throughout these episodes we use from them pe here 7.9 dividend yield 13 and high dividend yields can be dangerous you know to be fair But the 10-year revenue growth, 3% in Danish. Let's look at USD.

Maybe it will be different. No, it's about the same. That seems interesting. They sell cigars, right? It's always a solid business. Are they tied to the – they're pro-cyclical. They're tied to the Danish economy. Maybe.

Better economic results, more cigars sold. I'm guessing they sell international as well. But, yeah, you're founded 1750. that's durable right there that is durable well i'd say i'm on the feds uh i don't i'm not in love with any of the big index constituents there at least the ones you've we've we've talked over but scandinavian tobacco i mean 13 dividend yield if they're able to keep growing them yeah potentially all right should we do some of the small caps of the week i want to talk about one yeah i want to talk about um i guess two companies that were mentioned in

the chat accenture reported earnings the and they reduced guidance for next year i think it's like they're expecting revenue to grow like three to four percent the stock can you guess the current free cash flow yield for Accenture? 15? 12? Well, let me double check it. Those are some wild guesses. Okay, I'm going to say over 10. I'm guaranteeing over 10.

Yeah, it is over 10. 16% free cash flow yield. Yeah, no one cares. You cannot own this at any price. It's like the opposite of the space economy stocks, the AI winners, the

data center infrastructure winners. it's there's no price i would own the set same with wix i think wix there's a little bit of lumpiness but it's at like 25 which is wild where are you saying like that's what investors think like you can't own this at any price there's no price you would buy it for accenture the wix the ai losers of the world constellation software maybe a little bit different but i see i don't agree oh i'm saying this is what okay yeah yeah yeah it's being there's a lot that are just being discarded like just not want anything that's deemed ai risk they don't want investment groups want no association with it um but accenture to me like consultants i know what you'd think like

AI reduces the need for consultants. And yes, I think a lot of the work, you don't need to pay some junior level consultant, some whatever analyst associate to make you a slide deck anymore. But that's – there's a lot of reasons that companies hire consultants and maintain relationships with big consulting firms like Accenture that are totally unrelated to productivity. Firing people. Layoffs. We had Accenture come in and conduct a business review and we need to do layoffs because Accenture told us. Compensation consultants. Accenture told me I need to be paid $50 million this year despite not hitting my hurdles. I'm not sure that's what Accenture does, but maybe they have a small team.

Okay. Sure, sure, sure. It might not be directly related to Accenture. But I think consulting is a pretty durable industry, more durable than people think. And okay, here's the only part that really entices me about Accenture. dividend yield five percent dividend yield five percent and they're paying about 30 of their cash flow towards the dividend that's it so i don't think even if their cash flow got cut in half they could support the dividend yield and i don't think that's going to happen so i would be on the i'm on the side that this works over the next five to ten years unless the multiple just keeps compressing maybe we're going to be having the same conversation at a 50 free cash flow yield maybe maybe yeah this seems to be what uh and a lot of people are giving him i don't swear they're they're talking bad about it michael burry for catching these falling

knives i don't know if eccentric was one of them but there's the adobe's the pfizers it looks terrible when it's down 50 and then it's going to keep falling at some point timing the bottom is very tough but it would be insane if there was unless the business totally fell off a cliff next year that accenture which trading at a 50 free cash flow yield which is i mean whatever another 50 60 70 drop from here but if they're buying back stock which i think they are and you have that dividend like there is a ton of protection even if the business turns into tobacco ish and you're in runoff and you're you're seeing declining demand because i think what people get the mistake of is these businesses aren't going if they're going away they're not going

away overnight we talked about trip advisor that was a structural loser 15 years ago still i'm guessing generates positive unit economics today yeah um to shift gears a bit there you did mention pfizer that one i don't know if you saw the headline uh this week but the ceo he went on the land he went on the lamb he just yeah he left so i'm gonna go through the history real quick i don't know if it was a proper like didn't didn't respond to anyone and just left but like the uh the funniest one is the nissan ceo who was in trouble i believe in japan and he escaped in like a casket in the bottom of a plane to lebanon yeah famous story now he's still there he can't leave so i don't think that's what happened here but uh so to go through the history

in january of 2025 so a year and a half ago pfizer's old ceo left abruptly to join some role in the trump administration it was kind of a weird departure but they then brought in i believe his name is brad lyons from pnc who was sort of supposed to be the next up for the ceo role at pnc the departure the abrupt departure from the ceo spooked investors and shares started to drop in june of that year so six months later after they missed earnings the new ceo brad lyons uh it basically said the company needs a critical and necessary reset and he admitted he basically blamed previous management that the financial guidance was totally unrealistic and they were relying on over-aggressive cost cutting and basically it was this like the old management

really screwed up i'm here now i'm gonna make changes uh i'm getting rid of a lot of the old executives and bringing in my own team the stock fell more then there was even claims around misleading accounting with their business in argentina as well uh but well they reported non-fx neutral growth so it looked really great while that currency was in free fall but now that it's stabilized well can't play that trick anymore yeah i wonder how much of this Pfizer drawdown just comes purely down to Argentina's inflation driving the stock up. Anyways, in May of this year, so a little over a month ago, they hosted an investor day and Lyons, the CEO, said the company was past the worst of its challenges and things were going to start to improve. One month later, so a week ago, Brad Lyons steps down and takes a CEO role at Truist.

pfizer is now in a 78 percent drawdown from highs that is where i get scared like when when something's on the line of like value play value trap which is it i'm not sure multiple executive departures especially in a row someone comes in and a year later he's out and voluntarily takes a job somewhere else that would scare me because it makes it feel like there's something under the hood here that people aren't noticing that's completely fair and the one thing maybe to play devil's advocate on the other side lions is leaving for truist truist has a larger market cap than pfizer probably a bigger name in the banking industry it's you know it's not one of the big banks but maybe this could be considered a step up where

it's not necessarily like all right i'm stepping sideways to something that would be equivalent in that nature. So you can make that argument. Maybe he got an opportunity. He'd been waiting for this for a long time. I'd like to hear what he had to say or what management had to say because of that. If that's the case, maybe there's no cause for concern. But if he didn't see a lot of optimism within Pfizer's business, then I would say, yeah, it makes sense that he would leave and for reason for an investor to be nervous. But I'm looking at the stock here, Ryan, and I got a sneeze that's why i'm for anyone that's looking at the video i was trying to stop from sneezing there uh the pe is eight ev to ebit uh six ev to ebit 10 around that those levels not terrible

not it's crazy to be in an almost 80 percent drawdown and still be trading on ev to ebit of 10 like yeah it's kind of gone let's see where it's if it's gone down i would think it has to it must there must be some compression in the earnings another executive exodus brett adobe cfo don't know if you saw that okay yeah let's move to that but first uh for the listeners yeah The EBIT operating profit peaked at $5.9 billion in 2024. Now we're at $5.34 billion over the last 12 months. I mean, it's not that bad, but it's a little bit down from the highs. It's moving in the wrong direction.

All right. Do we want to take a small cap of the week, kind of eat our veggies here? Yeah, people said they like when we talk about these, and I have mine from last week. You have one from the listener suggesting this week. We can probably hit them both in five minutes each. Since you're the last topic, let me just go first with this one, Spectra Systems. This is another listener recommendation.

I thank everyone for joining the Substack chat. Link there is in the show notes. Toss out all these. We may not be able to hit everything on the show, but we'll try to hit anything interesting as any micro-caps or small-caps. Here is the company. Quote, their core mission is to protect governments, central banks, and private corporations against fraud, counterfeiting, and security breaches. They do banknote authentication, banknote cleaning, helping brands with counterfeiting, and detecting fraud for lotteries and gambling.

It's listed in Britain, England, market cap of $130 million, revenue growth of 21% annually since 2016. Some of that was inorganic because they had an acquisition of Carter Security Printers in late 2023. These are really sexy industries. Gross margin, 58%. Operating margin, 38%. pe is 6.6 but they had a forward pe of 14 to 17 due to a one-time contract last year

uh something i forget because i researched this last week something to do with banknotes but they work with central banks which again you might think oh paper notes are going away but again they they're going to need this probably forever i would say some maybe you could argue in the other direction it seems like this type of you know fraud detection counterfeiting if they're within the banking industry if they're working with brands lotteries kind of regulated systems gambling and things like that yeah you'd have to look at what the mode is but they've shown strong growth um and it seems like with the rise of ai scams things like that you know kind of super charging fraud capabilities for and crime capabilities for anyone out there feels like

this is something that will be more in need could be a gem i didn't look at capital returns but what are your thoughts ryan i kind of you know lukewarm interest maybe a six out of ten of of future research uh i'm probably gonna pass honestly i feel like too many times on these small cap of the weeks i say i'm on the fence and it goes on a watch list and then i'm never truly interested so i gotta raise my bar for what interests me all right let's uh maybe we can move on right to yours sorry to the listener all right we have another comment here from tyler related to the ceos and that's a good note for any listeners that haven't experienced this type of thing before i never truly understood this until brian nickel left chipotle anytime the

main decision maker for a business leaves it is because they don't believe in the future of that business i would say 90 plus of the time that is correct so it's a good rule of thumb now he has another question here related to the interview because ryan had missed that one but that came out yesterday if you're listening friday what it came out on wednesday on d local with james emmanuel uh new guests people seem a lot of comments that people like that so appreciate uh with that it was on d local and he said tyler says here are you adding it to the watch list seems like a clear acquisition candidate for something like adian uh the kind of comp for more not emerging markets europe and united states or in north america yeah i mean d local looks cheap

it looks like an acquisition candidate it's growing quickly they've gotten past the post ipo kind of spac craze era of 2020 2021 they've come back down to earth and they've gotten past the other side of a short report they professionalize their management team there's a lot to like i have it really up there on the top of the watch list uh there's quite a few you know i have toast uh tpbb holdings the discount grocer in mexico a lot of people like clinton standroken miller but d local for sure seems like a interesting business ryan what about you i need to give the episode a listen oh you're hurting our listeners ryan come on you gotta help out i generally like that setup though is bombed out post ipo and

everyone's just selling it because everyone else is selling it and it just feels like indiscriminate i guess and maybe there was some reasoning but i feel like a lot of my best investments have come from when sentiment is just really poor post ipo uh well it's an emerging markets player and there was a muddy water short report so people get yeah people just said i'm not touching that yeah it's fair and to whoever uh sent in the spectra systems apologies don't mean to totally dismiss it but uh i don't know for some reason it just wasn't it didn't do it for me i'm not sure i'm sorry hey maybe that means they're you know no one no one likes it maybe there's an opportunity the listener there is sometimes it'd be a good thing if ryan

and i disregard something uh because you know we're not we're not clever point we're wrong a lot yeah then i guess this another small cap of the week uh thank you to cade i believe for submitting this one this is legacy education which i will say just a bad name um you shouldn't have legacy in your in your name as a public company it makes it sound like you have outdated systems but um Nonetheless, it's a $142 million market cap company, so I guess you'd call it micro-cap, that went public in 2024, so fairly recent. And they own and operate colleges that are primarily focused in the healthcare space, so post-high school, primarily healthcare-focused. They own these colleges. Yes.

So students pay tuition. They get their credentials. They become a nurse, whatever. And there's a lot of different, like, services or healthcare credentials that they can get through these colleges. I think it's – I think they have four campuses at the moment primarily based in California. But they are acquirers of colleges. So here's a quote from Cade who had a good write-up on them on Substack. I recommend checking it out.

It says, Legacy's model is essentially a healthcare education roll-up. They find accredited but subscale California career colleges, acquire them at reasonable prices, integrate them onto its platform, and grow enrollment through its shared marketing and operational infrastructure. The financials look pretty good, which is generally pretty rare for a microcap. Seventy-eight million in revenue, 11 million in operating profit. They have been using stock to acquire some of these colleges. So keep in mind the dilution there. So look at it on a per share basis. But here's another quote from the write-up.

He says, Legacy trades at a forward PE of just under 12 and a forward EBIT of around 8. In addition, Legacy has a five-year average return on invested capital of 38%, 22 million in cash and equivalents, and basically no debt on the balance sheet. So in general, I like colleges as a business. These are less susceptible to online disruption given that you need some in-person experience for these fields. I also think that the healthcare sector and nursing and some of these careers. It's a growth market. Everyone is getting older and spending a lot more on healthcare. It's lovely.

Yeah, and it's resilient in tough times, right? It's like the health insurance. Yeah. So I like it, and I think it's a reasonable price. Maybe that's the reason I was dismissing the initial small cap pitch there, but I just – two small caps in one week. I don't have the time – don't have the capacity to add them both to my portfolio. So yeah, legacy education, great listener rec, and maybe we can throw the Substack write-up that we saw in the show notes here for listeners if they want to check it out. Yeah, I believe I've seen interact with Cade before.

I believe it is Cade Invest, but I'll toss the exact link there. I could be getting the name of the sub stack wrong. He does talk on our sub stack chat as well. Did you know, Ryan, that Athletic Powerhouse Grand Canyon University is a publicly traded stock and its stock is up 1000% since 2008? I actually, well, I know it's publicly traded. But, yeah, I did not realize it had performed so well. Let's look at their enrollment numbers because I think it's just absurd. And then we'll go on to another topic.

AI Overview says 130,000 students. I don't know how much bigger they can get, but it's been a nice winner. I could see that thesis 10 years ago working out. Yeah. I don't know what to think of publicly traded universities. maybe that's good maybe it's good for costs uh for education costs yeah we have a comment here that says college as a service should be illegal yeah yeah i could see where people could have some red flags there but you know with the cost of stuff you mention it maybe this can help drive

down cost if there's more competition yeah let's talk about this salesforce making another big splash with an acquisition they are acquiring a company called finn i thought for five seconds this is fiscal ai yeah actually you know it's funny on our if you look up fiscal ai finn.ai which is the company that's being acquired here uh bids on our like is always one of the sponsored listings on google just because mistyping stuff like that yeah um totally different sector but yeah it is kind of a similar name but it's an all-cash deal salesforce is acquiring them the company is formerly known as intercom for 3.6 billion finn is a customer support ai agent company so they handle customer inquiries end to end across live chat email whatsapp text

phone and slack so this is why i can't talk to a human this is who i yell at talk to a human all caps until i get a human yeah you probably interfaced if you've ever had a customer support the little chat button in the corner there's a chance that you've interfaced with this product finn does an estimated 400 million dollars in arr so salesforce is paying a little under 10 times revenue for this business most of that revenue at the moment is actually finn's legacy help desk software which you know it's still probably fine you know might might get disrupted by ai but they are also sort of the disruptor as well so there's about 100 million in revenue from their ai agent business they are buying this to bolster their agent force business to i whenever salesforce

makes an acquisition i think they spend too much but go back to go yeah or you you're in you're in jail what's the whatever the monopoly thing is you had to go to jail go straight to jail but it's i i actually think slack ended up being a good acquisition i don't know product wise i believe it's like 30 times sales so yeah revenue wise maybe your irr return on invested capital was low but product wise yeah people are locked in it's it's nice i mean molly fool uses salesforce products all the time i'm sure the sales side uses it more but i don't interact with that but tableau slack i'm guessing it would be this as well and you bundle it all to get they're sure you can sell to enterprises yeah and when i think too often people look at

the headline multiples with acquisitions like these when in this case the upsells going to be significant so salesforce can probably double finn's revenue by just selling it to existing customers at least double the revenue yeah not immediately over a couple years sure i honestly think this can make sense i don't know how much overlap there is between the sales department and the customer support but maybe there's some tie-ins there yeah yeah you sound like you're on the ir team at salesforce we have a comment here on the other side uh it says benioff is back at it he tried to sit on his hands and just buy back stock he should have and he did maybe he went we bought back 27 billion dollars in a quarter i'm done with this stock's not going anywhere

and i'm getting back to the old benioff and i'm gonna acquire something at this price isn't crazy but i gotta say benioff is he's really bad at being famous i don't know if you follow him on twitter but every time he has like a meeting with like a political leader he takes this selfie and like it's it's at least at least he's not yeah it's better than people that just try to be cool constantly all right at least he's well i mean he's paying matthew mcconaughey 10 million dollars a year to be friends with him so it's a little embarrassing he doesn't care yeah owns like hawaii or something it's fine yeah i mean he doesn't care other side note he has not been a buyer but prior to the last six months which i guess i should mention fiscally i recently got

this like insider transactions tracker that you can do so you can just see like benioff buys and sells over the stock value every day there we go well worth the money really like that feature uh he was basically selling for the whole uh back half of 2025 he was he's been a consistent seller he always sells stock in the open market and it's basically half a million dollars every week which whatever good for him the the sale stopped in 2026 he has stopped selling stock now that's not buying stock but that's pretty much a levered buyback levered taking out debt to buy stock if you're mark benioff yeah i mean that's a step in the right direction if you're a sale if you're a potential salesforce investor here i think that's a good sign honestly

it's a sad state of affairs but that would be a positive indicator i'm not lying i would say that's positive yeah um okay we're potentially running up on time here so um i gotta i gotta show you a photo let's just get your reaction here i think you know what i'm gonna show you but oh my gosh yeah please describe what you were seeing ryan for the people not watching For those that don't know, Evan Spiegel, the founder of Snap, formerly Snapchat, he made some glasses. I think VR, AR glasses. I'm sorry. I'm just laughing looking at him right now.

It looks like someone took a picture of Evan Spiegel and put the sunglasses emoji, blew it up and put it on his face like with Photoshop. they look enormous um and there was a there was a quote that he's i gotta pull this up i gotta find this because it is an outrageous quote for a consumer product he says these glasses are highly wearable yeah that reminds me of uh the general ackman this week he said what makes spacex valuable is that it's valuable do you remember that did you see this i did not see that no i'm gonna pull up the exact tweet uh but yeah yeah that's um snap maybe that's my no i'm not buying this at any price like if you said you could buy this for a market gap of 100 million dollars i don't i i don't know i don't even know if i would do it this is ridiculous this is the rd

is going to nowhere first off these type of things should be made illegal because it's just used to film people without their consent same with the better ray-bans i think these are those are ridiculous and like people that are focused on ai water uses at data centers which if not to go on a rant if you're worried about ai usage water usage at data centers you should be worried about water usage at lazy rivers it's the same analogy just gets recycled so it's not a thing trust me uh but yeah back to the glasses like there's no use for these and i think they're bad for society and i think people are going to get very upset if they just get filmed to constantly in public and second not a soul is buying these at least the meta ray-bans look

all right they got the ray-ban brand this is terrible is a concept of a company they're not like real company it's exactly right it's so and i'm pretty sure he has a ton of voting power so they can't oust him i could be wrong i would be surprised if he didn't have a bunch of voting power because i don't know how he'd still be in the seat he's full dictator there yeah this is the most like egregious i own the company and i'm just gonna do nothing with it for 20 years except a bunch of fun side projects his life sounds good yeah honestly uh all right here's the bill general ackman's tweet june 16th one of the things that makes spacex so valuable is how valuable it is i don't know where to go with that he's using the stock to buy cursor that's like the people

that would say back in the day well palantir shopify they're trying to get such an expensive a multiple they're using their stock the spc shouldn't even count it's kind of the things you see when the top is near yeah that is true whenever you start factoring in that like if you ever start saying wow this is great they can use their stock as currency and it's cheap that's usually a bad sign i remember thinking that a couple times with certain companies in 2020 i'm like well you know they're making these acquisitions but hey they're using stock and you know it's over it's expensively valued so uh you know maybe it's the right idea yeah they get advantage of you if you're doing that uh look if the ducks are quacking as they say

you got to feed them i think it's smart for management teams to do this and if your stock just goes to 100 times sales you should sell at the atm uh what are those called at the money offerings until you go back to normal just literally keep raising money until the stock goes down i would love rocket lab to do this just keep selling stock until that happens uh let's see we have some comments here that says people don't want to wear stuff on their face that's why lasik is popular it's true uh and pervs by those glasses i'd say also true let's see yeah we have another realizing there's two tylers in the chat of the 20 that watch there are two tylers and yeah they can get confusing they're both great contributors though all right ryan any anything

else yeah before we close out autodesk it's looking pretty interesting here oh god that's famous last words i know i'm thinking the same thing below 200 it's such a dog it is god just someone stopped me from buying this because it looks attractive ev to ebit which is my favorite I don't want to know the use just I'm gonna keep pretending it's 50 it's 21 and a half so it's still you know it's still somewhat expensive I think you could call that maybe a premium multiple it's not it's not a home run multiple but they're reducing stock-based compensation which is driving up gap earnings they should be able to consistently grow at will with high incremental margins so i suspect margins will continue to grow and ceo and cfo

both bought shares in the open market this week god just don't give me don't i don't want to i don't want to touch it they are just caused me so much pain psychologically but i want the ceo out yeah the rule of 40 the damn rule of 40 uh i like it all right here's before we get out of here ai winner ai loser autodesk ai winner it'll be additive to their software people are not going to switch software but they would like probably some ai improvements to the software and you can make it make it more valuable uh for your customers i'd agree with that as well and they've been investing in automation

for like a decade. I just don't think they're telling their story very well. They're probably getting tossed into that software index and everything in that index is going down until Mr. Marker decides otherwise. All right, Ryan. Anything else? Good luck to the, as people listen to this,

the U.S. team is going to be playing in a couple hours. Maybe. Ryan, one of the biggest days of Ryan's life? No, that's only if we make it to the quarterfinals. I will be down by the stadium close by. Oh, Ryan's in Texas. Yeah. It should be fun. Yeah. Yeah. We'll see. Exciting stuff. All right. All right. Yeah. Ryan, you want to hit the disclosure? Yeah. Thank you, everyone, for the comments. Very active chat today. Appreciate that. Thank you for all the questions in the Substack chat as well. We want to remind listeners that Brett and I are not financial advisors. Anything we say or discuss here on Chit Chat Stocks is not formal advice or a recommendation.

We may buy, sell, or hold any of the securities discussed on this podcast. So please do your own work. Thank you again for tuning in. We'll see you all next time. Bye.