Chit Chat Stocks - Austin Lieberman | BioLife Solutions (BLFS)

Episode Date: December 15, 2020

On the 15th day of Christmas Austin Lieberman gives to you, BioLife Solutions the bioproduction company. BioLife Solutions focuses on cell and gene therapy developments. Austin Lieberman joins Chit Chat Money to describe to you how BLFS may be a great investment. Visit our website: https://www.chitchatmoney.com/ Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Follow Chit Chat Money on Twitter: https://twitter.com/chitchatmoney Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to 25 Stocks of Christmas presented by Chit Chat Money. Today we have an interview with Austin Lieberman and we're talking Biolife Solutions which is a company that's kind of close to us literally. We talk about that in the interview yeah. Yeah so it's pretty interesting and it's a sort of a pickaxes type play except for the genomics space so it's pretty interesting but then we have our sales pitch which we're going to keep short because Austin gives his sales pitch. Yeah. So he's a lead advisor at Seven Investing, our partners. He goes through the whole spiel of why someone would want to subscribe to them, but I'll just keep it short here. You can use code CCM to get $10 off your first month. Welcome to Chit Chat Money. On this

show, host Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investment. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are not financial advisors. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or a recommendation. Now, please enjoy this episode. Today, we're welcomed by Austin Lieberman, a lead advisor for our friends, Seven Investing. Austin, you've been on the show before a few times, but how are you doing? good yeah we battled it out about slack a long time ago on the show right and i forget uh i don't remember if slack ended up getting acquired higher or lower than when i was when i was bullish

on it uh when i was first on the show i'm just gonna say it was higher because i'm too lazy to look and then everyone can think i was right so yeah there we go yeah that's a good strategy and today we're talking bio life solutions which is probably a name most people haven't heard of So how did you come across them? We found out that they are like 10 minutes, 20 minutes away from where we are now. Like that's their headquarters. So if this is really interesting, we might have to do some boots on the ground research. Yeah, we're going to check them out for you.

Hopefully it's a real office, right? That would be embarrassing if it was just a shadow company. Yeah. Hey, before we get started, what this, the 25 stocks of Christmas thing you guys are doing without, you know, insulting any of your guests what uh what's been your favorite and least favorite stock not guest no hurt feelings here just stock that you've heard about so far okay probably the unique like there's some that the most uh the ones i like the most are the ones that like i'd never looked at so jim gillies brought on nelnet uh and so just because i'd never looked at it was really interesting um and then i guess you know devol cotetra he i guess the day we're recording this

he came out with a trade desk and he's an expert on that company he's known them for a long time and that's just not something i'm comfortable investing in but either way like it was a fantastic episode and that's just not a stock for me but it's uh it's on our end like nothing's been uh everything's been entertaining and super interesting it's just like if i lack conviction then it's hard to you know want that company but yeah i guess uh i know that was probably the most fascinating. Oh, there's a, another one that's coming out. So I don't know if it'll come out before or after this one. So I'm not going to say it, but it's a monopoly in France. Yeah. Small cap. Interesting. Cool. Yeah. Yeah. That's interesting. The trade desk is one that like I

own the stock and for pretty much all of this year, minus the drop during, you know, COVID or March. I just felt like it was way too overvalued for the growth, but the market is clearly disagreeing. Right. And, and I don't know, I guess they're pricing in the expected growth from China or a future market opportunity or whatever, but that's one that I owned and let go and have been regretting it ever, ever since. But yeah, cool. Uh, so that's, that's kind of what I wanted to bring up with buy life solutions, right. As a company that maybe a lot of people haven't heard about. And to be clear, like I'm not an expert in the company. Right. And so I think before I got us way off track, you asked me kind of just how I found it. Right. Yeah. So there's a lot of

different ways we find companies, especially on Twitter and especially lately. Right. It feels like there's just a million companies talked about and there's SPACs on top of SPACs on top of SPACs. Um, there's a lot of different like publications that I, that I kind of look for each year. Right. And so, uh, one of the ones that was super interesting to me that always is, is Okta's, um, like business at work that comes out every year. And that talks about a lot of these like enterprise applications. And if you were paying attention to that report, you could have seen the growth of zoom and, and, uh, even Slack and a lot of, of these different enterprise applications, even Atlassian and their different apps, right? You could have seen the growth of

those things pick up before a lot of their stock prices did. So sometimes these types of reports are a great way to find stocks. And so the way that I initially found BioLife Solutions was Deloitte, which is kind of like a, it's a consulting firm, right? They release a report every year. That's called the, it was the 2020 technology fast 500 awards. And these were basically, um, they've done it for the past 26 years. And they've been the, the teaser is that they say they've been honoring the most innovative public and private technology companies that hail from cities across North America. So that's kind of the premise of the list, right? And they, uh, they basically, um, either companies are nominated or they find them with public data.

And it's all based off like the growth rate of these companies. So that list came out in December of 2019. And I actually tweeted about this. And so I think we're both fans of Y charts, right? And so I went through Y charts and tried to add every single company in that entire list to a watch list, right? And I don't know, maybe a third of them were public. Right. So, uh, that, that, and then I basically filtered that list down, um, using, I don't want to call it a screener, but just like looking at metrics that matter to me. And these metrics were, were, uh, between basically a $1 billion. I think I actually went a little bit lower than 1 billion for this. Uh, but it was between a 500 million and 50 billion market cap, looking for revenue growth that was over 30% a year, looking for pretty solid operating margin, sales and marketing as an expense of revenue going down over the years, pretty low debt to equity ratio, and then increasing free cash flow.

So those are a few of the things that I looked at. I narrowed that list down from 150 companies down to 25. And then I narrowed that down even more to the top 10. So, you know, you could do that first part. Um, I added them all to the watch list. I probably took 30 minutes or whatever. Uh, and then using those metrics could quickly narrow down from 150 to 25 and maybe another 30 minutes. And then with those 25 companies, that's where I would spend maybe five minutes looking at each company, uh, and then got it down into a top 10 and then spent, uh, you know, maybe 30 minutes or so looking at those top 10 companies. So just want to provide that overview, lots of different ways we get information. And then whatever your process is, there are ways to filter out, to look

at a lot of companies, filter a lot of them out very quickly, and then, and then prioritize your time and spend it on just the 10 or so that you want to study. And so that's, that's how I found BioLife Solutions. It was one of the ones on that list. It met all the metrics. And then in December of 2019 or it was January, early January, 2020, I actually bought a bio-life solutions, um, digital turbine, which is like crushing it this year, ticker apps, uh, Talaria, which is now Magnite. And then, um, uh, Luckin coffee, which obviously became a huge fraud. Uh, but my approach with those, right. It was, they were very low confidence positions. Um, didn't know much about them. And I just opened up like 1% positions in all of them. And, and knowing that I was going

to be wrong on maybe two or three, but if, if I could get one massive winner and these were my shot at like 50 to 100 baggers, um, because they were all, you know, pretty much a sub $2 billion market cap. So a hundred bagger from there is still, um, less than a hundred billion dollar company. Uh, and by all our solutions at the time was like a $500 million company. So a hundred bagger, I think is bad at math, but I think that's like a $50 billion company. Um, so when you've got $1.5 trillion companies, it, it, it's not out of, it's not crazy to think that a company like biolife solutions could be 50 billion someday. Um, so that was my approach, just small 1% position. And, and then my strategy with it is, is really, uh, just to hold it and it's going

to be volatile. And if the position, you know, becomes a 5% position in my portfolio growing on its own, I might really start to pay attention to it and say like, all right, uh, is it, is it still, is it way overpriced? Does everything still make sense? Do I still want to hold it? But until then, honestly, like I don't even pay super close attention to it. Um, outside of the work I've already done. I think I just talked way too much and covered probably like 10 of the questions that you want to ask me, but happy to also go into what the company does and all that stuff. Yeah. I was going to say that the most important part there was probably the way you're trying to turn over as many rocks as possible and companies that fit your style. Would that be the way that

you're trying to explain that there? Yep, exactly. And, and, and so there were a ton of like pharma companies and biotech companies and people that are creating drugs and stuff like that on that fast 500 list. And, you know, that's just not an area that I'm an expert in. We have at Seven Investor, we have people on our team that are experts in that, Manisha, Sammy, and Max Chasko, but that's definitely not me. Right. And, and, and so a way that I filtered some of those questions, I just cut out all the companies that I like, I knew way out of my league and had no idea. And what I liked about BioLife Solutions is, is they're, they're in the, uh, like bio preservation and gene therapy industry, but they're not a drug producer. So I view it more as like a pick

and shovel approach to having a stake in an industry that a lot of the smartest people and investors in the world, like the folks over at Arc, they think that industry is going to be massive, right? I know my limitations and I knew that I wasn't likely to find the drug producer that was going to be the winner, but I bet on biolife solutions because I think if that industry does well, which everything is pointing to it doing well, and all these smart people are saying it's going to do well, then the company, and I still haven't said what they do, the company that provides the, like the biopreservation for preserving all these different, either for companies that are creating these, um, vaccines and different therapies, uh, helping them

create them and preserve them or preserving the actual like tests that people are doing on themselves and then shipping them to facilities or storing the, uh, different samples and tests at clinics. Um, that's what biolife solutions does is they, they provide the, uh, the cooling, um, the word is but containers basically and then the shipping ability and the right solution to be able to like thaw that stuff the right way after it's frozen um so that they can they can uh test it and do all the things that they have to do with it they provide basically that entire logistics chain to uh customers clinics and then companies that are developing all of these different therapies

okay so is it uh getting them from say the pharmaceutical companies they make this stuff or the gene editing companies, they make this technology, all this called, I don't know whether how it's getting deployed to, you know, treat people, but they get it from there safely to hospitals and treatment for doctors to use without messing up, uh, you know, the chemistry of the biology that these treatments are made up from. Yeah, exactly. And they've also got, and we can share this out, maybe the, like an investor presentation, but they cover, they cover kind of the whole journey, right? So they've got a series of products that, that, um, would be used at the, like the donor or patient level, um, to collect if they take a blood sample or whatever

from patients, um, and preserve it and then also freeze it. They also have, um, products that keep it frozen and can actually track that things, uh, stayed frozen and stayed at the temperatures they're supposed to during shipping. Uh, and then they, like you just said, they have, um, products for the developers, the gene, um, the cell and gene therapy developers to actually use while they're creating these drugs. And, and, um, as they send them out to, uh, through manufacturing, um, the final formulation and storage on site, uh, and then again for shipping for them. And then they also have a set of products for dose preparation for hospitals and different clinics and stuff so they cover kind of each phase of of really everything for for selling

gene therapy from patients to developers to clinics and hospitals they've and they've they've done that through their own products but also through some acquisitions that they've made over time interesting and to piggyback off what you said earlier um this isn't necessarily like we've had max on now uh and he dug into fate therapeutics um and it'd be really hard for the average investor to get any sort of edge there this is more of a bet on the industry and you know we recognize there's going to be winners and losers that come out of the gene therapy in this whole industry uh but bio life is just they are winning as long as capital is flowing into the industry right that's i mean that's what i think and again i'm not an expert in the industry they do have

some competitors a company called cryo port is also a competitor my take on on that is like i don't know if biolife solutions is going to beat cryo port or if like who's going to win i think uh they're both like at this point sub still sub two billion dollar market cap companies um arc put out a report right uh and we i can share this link with you but it's it was the genomics innovation a catalyst for growth right and in their report they just highlighted uh basically the genomic age right so a couple of points um over the last five years we have and this is i'm just reading from their report we've passed a key inflection point in the ability to access manipulate and understand the molecular building blocks of the human body um the cost to sequence

genomes has gone down editing dna has become uh more accessible and cheaper um and and so basically what they think, and I was just looking for it. This was sort of their high level summary. ARK Invest estimates that by 2024, therapeutic pipelines and tool providers should generate hundreds of billions of dollars in new revenue and trillions in new market capitalizations as they transition to the genomic age. So that is kind of like the high level on what ARK thinks and a lot of other people think is the potential for you know that industry and so uh as you drill down everybody that's developing those those therapies and drugs and everybody that's that's taking blood and samples and all that stuff they've got to have a way to ship them and store

them and we've even seen it with uh covid vaccines right like they've there's been a lot of information coming out that they've got to be kept at a really cold temperature uh that type of thing is exactly what um biolife solutions and then cryoport and they've got some other competitors as well uh but i think the market is large enough now and is definitely going to be large enough for multiple companies to win yeah so uh you kind of already made one of these references but it's a bit like the levi genes of the gold rush or the pickaxes i guess of the gold rush uh just in the gene editing or genomic space yeah and in they uh in one of their recent investor presentations They, BioLife kind of laid out the investment thesis and I actually agree with a lot of these points, right?

So what they say is that they're a pure play picks and shovels bioproduction solutions provider serving the cell and gene therapy industry. We kind of talked about that. They say that they're enabling scalable manufacturing of cell and gene therapies, potential cures for cancer, which is another, you know, huge area. That's a very real industry. and then other leading causes of death. A key macro growth catalyst is pay for response. So this is a big thing too. What that means is that's the reimbursement paradigm driving the use of optimized tools. So what they mean by that is say a company or a customer takes a sample or a test or orders a drug or something like that. If either they don't get

a good outcome, whether the drug doesn't work or there's adverse reactions or they don't get good data on the sample that they send in or just whatever it is. And again, I'm not an expert in this industry, so I might be using all the wrong terms. You can yell at Ryan and Brett on Twitter if I'm wrong about this stuff, right? Don't yell at me. But anyways, so if that stuff doesn't work, basically if the customer isn't getting what they paid for because of an issue with how it was maintained while it was shipping or if it wasn't stored or it wasn't kept cold enough then uh those companies or even those uh the hospitals might not get reimbursed by insurance companies and so that drives them to use optimized tools like what bios uh biolife solutions does to make sure that

they're not liable for uh or help make sure that they're not liable um for for some of those issues if they happen or so that those issues don't happen so that they actually get paid for the therapies that they're doing. So, uh, it costs money for, for companies to buy these storage containers or have the, uh, the optimized shipping that BioLife Solutions does, but it can save them a lot of money if they're not, uh, losing profits from, you know, these different claims and stuff like that. Have you looked into management at all? Um, sort of who's running the company, any of that stuff? Yeah. Um, they've got a pretty experienced, I mean, I just updated this. Um, here we go. Uh, they've got a, um, an experienced management team. Their CEO, Mike Rice has, uh,

been the CEO for 14 years. Um, so he's got a lot of experience with the company. He was, he was at the company even before it was public. Um, and then they've got, uh, Karen Foster is the chief quality officer. Um, she's been in the quality and manufacturing operations industry for 25 years. Uh, and then she spent 13 years as a VP of manufacturing, um, at, at, uh, like another bio company. And they've got other executives that also have years of experience, but the biggest one is, is the CEO really. Um, I like that Mike Rice has been there for 14 years they've they've really evolved um and and sort of grown their capabilities through acquisitions and that's a kind of a pro and a con to the company i think like uh if you

read the book um uh the is it the outsiders or uh yeah the outsiders about about the like the best capital allocators right um i'm of the opinion like people that are companies that acquire other companies that can be kind of a risky thing because it's hard to do a good acquisition but there's been a few companies throughout history that have been really good at it right and so the ones that have have have rewarded shareholders uh really well and so far the acquisitions that biolife has done have been successful um the company is let's see over the last uh basically since 2017 i think the stock's up like 1500 or something like that uh and it's still sitting at about a $2 billion market cap. So the company has a kind of a history of success

and the same management team is there that's been there for a long time. And have they made any indications? I know sometimes companies won't say this, but have they made any indications that they want to use their stock price to kind of go after competitors maybe or adjacent companies to try to use that as a currency? Yeah, they've actually, they laid out kind of their M&A strategy. I think they talked about on their last call, but they also in this investor deck. Basically, their goal is to, they call it out as to acquire synergistic products and technologies to accelerate growth. They want to leverage scientific and customer service reputation within the cell and gene therapy space. They want to cross-market an expanded product portfolio of a large base of already sticky customers and then capitalize on a fragmented base of bioproduction tools and suppliers by consolidating several to become a broad-based trusted partner. And they've even recently

raised money. And I don't know if they did that through dilution of share. I don't know exactly how, but they have recently raised money and they have specifically said they're looking to, you know, add more potential mergers and acquisitions. Okay. And you've mentioned, you know, parts of the bull case here. You know, you talked about the picks and shovels, the fact that the tailwind, you know, with the ARC research and others that can see that this industry is growing rather quickly. Are there any other parts of the bio-life bull thesis? Why do you think this is a strong investment? Yeah. So, I mean, talked about the sort of like the fundamentals I looked at of the company.

right? I mean, I talked about the categories I look for, but not the specific fundamentals of biolife solutions. But you talked about the share price over the last three years. Trailing 12 month revenue over this since 2017 is up from about 12 million to 41 million. So that's almost what 3x in revenue. A lot of that, though, is from acquisitions, right? So that's something that we have to keep an eye on. Their free cash flow has improved from around, I'm just looking at them like eyeballing it here. I think it was around a couple hundred thousand to 2.6 million in their most recent quarter. And that's, I believe that's trailing 12 month. Their operating income is improving, net income is improving, and then their sales and marketing as a percent

of annual revenues, which I look at that, look at it a lot with SaaS companies, but any company that's important, right? So we want to see sales and marketing go down as a company gets more well known and they have more products because it should be easier to sell, right? Their reputation is getting better. That's actually gone down from about 40% in 2017 to about 17%. So 17% of their annual revenue now is spent on sales and marketing. It's pretty reasonable. So I like the past performance of the stock.

We see a lot of times companies that have done well continue to do well. And then the fundamentals are there as well. They're growing their product portfolio. And then, uh, in there to sort of back up the, the wider industry research that arc and other people have done, they shared some slides as well. Uh, there's 1,078 regenerative medicine and advanced therapy, clinical trials underway, uh, worldwide at the end of the first half of 2020. so that's their market right so the fact that more and more of those trials are happening means there's going to be more demand for these types of products so that i mean that's a big number uh and then in um so global financing for regenerative medicine this is according to their slide there was 10.7 billion dollars raised in the first half of 2020 which is up 120 percent

year over year from the first half of 2019 7.9 billion of that was for gene and gene modified cell therapy um or actually this is i think these are separate numbers and then uh 7.5 billion was for cell therapy and then i don't know if those two are broken out but either way um the the trends from the broader industry to me it appears that there's more trials that are going to continue to happen there's there's more therapies that are going to continue happening then the demand for this over the next decade i think is going to continue going up there's a lot of funding there's a lot of capital that's just flowing into it too which is i mean regardless of the success of some of those clinical trials that bodes well for biolife solutions right yep and then uh another

another thing so i looked at their customers too right like i'm by no means an expert in the industry, but I've heard of a few of these customers and it's, it's good to see that they're customers of biolife solutions. So, um, just a few of the bigger ones, Celgene, uh, CRISPR, Editas, um, Intelia Therapeutics, um, Iovance, Kite Pharma, Novartis, um, and then, uh, a couple of their, their larger clinical, uh, clinical centers, the Myoclinic, um the uh stanford so again by no means am i uh an expert i don't know um every every customer or every producer in this industry but uh those are those are companies that we see in the news all the time that are doing you know a lot of different stuff across across a lot of different

categories um and it's good to see that their their customer count is growing yeah do you know if they have any patents i imagine they do are their products patented because i'm just picturing like it sounds like a bit of a hidden gem here um but if like a competitor could come along and do the exact same thing then maybe it isn't yeah so they have they have uh what's called bio preservation media which is the solution that you you mix stuff with to preserve it um that is developed with, um, in-house IP. Um, they've acquired, uh, a company that does automated thawing. They've acquired a company that does cloud connected shipping containers. Uh, they've acquired a company that creates, uh, manufactures high capacity storage freezers. So, um, that's

the ability to where a customer would buy, uh, a storage freezer to store, you know, uh, however many hundreds of thousands or millions of doses or whatever. Um, and then they just recently acquired size safe, which does bio storage. So, uh, I don't know that, you know, I don't know all of the intellectual property, um, or patents that, you know, all of those acquisitions have, uh, I'm sure a lot of it is patented and then there's some of that probably isn't right. Like there it is possible that other people create the same things that that biolife solution has and uh could potentially steal customers or take market share or whatever i think some of these purchases are big purchases right and it's like important material so if they are a customer

and they're using you know multiple products from biolife solutions then uh it's likely a pretty sticky relationship because it'd be a big overhaul and a lot of risk to switch all that out okay i think that's all the questions we have for the first half right yep okay we're gonna hit a quick break and then we're gonna try to poke some holes in austin's thesis cox panoramic wi-fi includes advanced security to help protect all your connected devices you'll get real-time alerts oh like this one so you don't have to worry about malware or when your kid downloads a song from a shady link and now all your computer can play is red color red color where are you all blocked thanks to advanced security included with cox panoramic wi-fi

advanced security must be enabled in the panoramic wi-fi app restrictions apply welcome back in next up we have devil's advocate so these are our counterpoints and it's austin's job to refute them uh now i am going to say i'm going to mention the valuation which should be a good sign for listeners if i can't find anything wrong with the business i typically resort to valuation so i'm using that uh it trades at 29 times trailing 12 month sales has 18 net margins which that's solid but you know it's not 40 like someone like zoom or something right and uh i guess the worry here is that there's not enough margin of safety yeah um the the price to sales ratio has definitely expanded this year um when i first bought it in what was it december of 2019

it was at a i don't know a 10 or something like that price sales ratio um i so let me to be clear this is a started at a 1% position for me, right? And so when I have a company like that, that's really sub like 20 billion market cap, I am very willing to invest like almost doesn't matter what the price to sales ratio is, if it's a 1% investment for me. And if I think that the potential growth is, you know, possibly 50x, because even if I'm wrong about that, even if it's just 10 X then, uh, which is what buying a company at too high of a price to sales ratio, then, uh, you could be sort of cutting your total potential gain down significantly, but there's enough upside there because of the size of the company and the potential growth of

the industry that, uh, I'm not really at all concerned. And because it's a 1% starting position for me. And it's now doubled. So it's like 2%. Because of those things, I really don't care about price to sales ratio. And it's not absurd either. We're not talking about like 100 or 150 to where even if there was no multiple expansion, so if it just stayed steady, the company could very easily grow into its valuation. And then the stock could move higher, even if the multiple stays the same because there's so much room for growth in the industry. And it's only a $2 billion company at this point. I don't even know if that's, if that's right at this point.

I think that's around the right, but it does move a lot, but the, so you're kind of with a high risk, high reward thing like this, you're kind of thinking, all right, I'm just going to coffee can it. With a small part of my portfolio, it's not one of your core holdings. It's just kind of a coffee can. Whatever happens, happens. You're going to look at it in a decade. Yeah. And to be clear, like I do care about valuation, right? I don't own the trade desk because I think the price to sales ratio is ridiculous for the amount of growth. But the

trade desk is a, I don't know, whatever, $40 billion company now. And this is a $1.3 billion company. So as a market cap is lower, you have a lot more space to be wrong about the price to sales ratio and it'd still be a great investment. Okay. And then my counterpoints, so the chairman just left the board of directors or one of the big members of the board. He sold his 5% stakeout to outside investors. I know it's something called the Card Dill Group, something like that. They have 20% ownership. So that kind of shows to me that either that he thinks the stock is overvalued or that he has lost confidence in the business. Have you heard anything about that? Because when someone looks at this, that's probably a concern they're going to have. Yeah. I haven't paid super

heavy attention to that. Again, like I don't watch the company every single day. I'm not real concerned with, you know, one person selling 5% of the shares. If we start to see that as a trend and there's a CEO transition or the CEO sells an abnormal amount of shares or something like that, then it would start to be like a red flag. But like I said, the stock's up, I don't know 1300 or 1400 or something like that in the last three years like i don't really i don't really blame people for cashing out if they're moving on um yeah especially if they've been there for over a decade yeah but if that trend continues and yeah definitely something to a yellow flag at the very least okay yeah this is just sort of a tangent but i'm surprised more

there aren't more people that are just old people on the boards of directors that are like yeah i'm cashing out all my shares yeah and then just explaining like hey look i uh it has nothing to do with i'm heading into retirement you know yeah um i think so i think that's all the counterpoints right uh i guess you said you're not doing as much maintenance or diligence on this as you know obviously some of your larger holdings but what would have to happen for you to get rid of this position? I think if we saw fraud would be one for sure. Right. If there was, if there was fraud, um, if we started to see them making, I talked about, they do a lot of acquisitions, right. If, and so far when you watch them, uh, it seems like the acquisitions are going well,

their revenue growth was like 70% ish. Yeah, it was, let's see, revenue recap Q3 2020 was up 71%. If we start to see them making these acquisitions and then it just not working out or expenses going way up and continuing to go way up, that would be a red flag as well. And really, again, because of the nature of this investment, right? And that it's in that a risky 1% bucket that I think could be a 50 or 100 X, like I would be okay with it going to zero. Obviously that's not ideal, but like these types of companies are really easy companies to say, oh, they had a bad quarter. The stock's down 30%. I'm going to sell it. And then you look five years later and it's a $10 billion company or whatever. And you're like, I should have never

sold, you know? So I'm not trying to like skate out of the answer, but I'm just, I guess, trying and provide a perspective to people, it's like, hey, for different types of positions in your portfolio, for me, a 1% position requires, I look at that a lot less than a 10% position in my portfolio. Yeah. And not everyone invests like that, but there's, I mean, your example from earlier is a perfect example of why it works. You had three companies, I guess, four companies that you bet on one was a goose egg uh sorry to say but obviously obviously everyone knows what happened with luck and coffee um and even if one of them fails you can still two or three extra money in those investments by just one being hugely successful yeah yeah digital turbine is up

490 this year right and so that makes all the rest of them could have gone to zero and you're still winning at that point um you you guys said gross margins was what 12 or something like that uh that might have been i think net margin i think we said net net margins net margins 18 got it got it okay okay i thought you said gross margins are 57 yeah yeah yeah um yep okay uh any more questions yeah no i guess we just have one more and this is a tough one because again it is the the coffee can style but uh if you know is there a change you'd like to see biolife sciences make um maybe on the capital allocation front because they do have that volatile stock price that they could take advantage of? Yeah, really, I think it's it's I

want to see them slow down on acquisitions for a little while they they've they've made four acquisitions in the last 18 months. And so that's a lot right? Like it's hard for any company to to make that much change. I want to I hope that this has been a period of just heavy investment for them. And I'd like to see over the next year or two, maybe they make another acquisition or whatever, if it seems really opportune, but, or opportunistic. Um, but I'd like to just watch them, um, get to work and, and sort of like work all the, the sales processes out and get everybody incorporated into the business. Uh, and just see the acquisition acquisitions that they've made, uh, come together, um, and, and just make a, like a more synergistic single company,

versus continuing to acquire more and more companies. Again, they're much better at that stuff than me, but just as an investor, I know how complicated acquisitions and mergers can be. So I'd like to see them slow down. They usually don't turn out as like the things they talk about. Typically it doesn't turn out like people say, because you're merging two giant businesses, right?

Yeah. And it's also, that would give you a chance as an investor to see what, or grant, organic or normalized growth looks like? Because I guess if you're an investor now, you probably want to be focusing not only on revenue growth, but revenue growth per share, because a lot of it might be diluted if they're making these acquisitions with the stock. Yeah. Yeah. And so real quick, I didn't hit on the Q1 to Q3 2020 highlights, 75% year-over-year revenue growth, over 450 customer applications. So we want to see that number stay

up because as their customers have new applications for, um, new, uh, treatments and vaccines or whatever type of customer they are that drives more demand for their products and storage and stuff like that. You asked about patents. Um, they've got 50 total patents and they have three new patents, uh, this year and then, uh, 144 new direct customers year to date so far. So through the third quarter of 2020. Um, so that's sort of an update on like how the business is performing right now, even during COVID and management has also talked about, uh, for a lot of their, like the, the big storage that requires sales teams to be able to go and meet and go on site. A lot of that stuff has been turned off and not allowed during, during COVID. So, um, I think

that part of the business is still growing at around 20%. Uh, there's a chance that that's actually going to pick up going into next year as restrictions ease and and more people um are allowed to go on site and they can do these sales calls uh so we could see part of their business um strengthening going into 2020 which is or 2021 which is what i like about the the company and then obviously the big opportunity for the next decade or two decades just in the entire industry okay i think that sums it up yeah it's biolife solutions we'll uh try to drive by headquarters and give you the update in case it doesn't exist. Yeah.

I think it will, but hopefully, yeah, we'll maybe stop by and see what's going on there. Oh, before we leave, we want to give you a chance to do our sales pitch for us. Right, the old seven investing, right? Yeah, if I'm a seven investing subscriber, what am I getting? Yeah, so a lot more thorough research

than I've done on BioLife Solutions, right? I wanted to bring BioLife Solutions to this discussion, just to hopefully present an idea that maybe not a lot of people have heard about. And also a way to potentially manage your portfolio and take a shot on a couple of like risky positions with a small part. That's advice, but it's just something that I've done. At 7 Investing, what we do, in case it's the first time you've ever heard of Chit Chat Money, you've never listened to Ryan and Brett before. We just, we have a team of seven advisors that do sort of deep research into our own areas of interest and expertise. And then each month we provide a,

each of us provides our best idea, our best long-term idea in the stock market. And it's $17 a month. You get a full report. You get to see all of our previous picks, all of our future picks. We've got our recommendations, not picks. We've got subscriber only calls. We have some subscriber only information. We share the presentations that we give internally to the team. When I come up, when I came up with my December recommendation, I presented it to the team first, and then we sort of get feedback on it and then roll it out to subscribers. All of that stuff is open to subscribers and it's normally 17 a month, but I think you two have a code CCM that people can put in and they get $10 off their

first month. So it's seven bucks and we appreciate working with, with you, Ryan and Brett. And it's, I mean, I was, I liked you guys long before you were partners with us. And I've just been a huge fan of your podcast and what you two are doing. It just excites me, your, your passion and watching you two learn and learning with you, right? Like I'm, we're all learning. It's fun to learn with you. Yeah. And where can any, any listeners find you? What's your Twitter handle? I am at the number seven Austin L. Um, yeah. And just, if just search cash sign FSLY on Twitter and you'll probably see tweets from me talking about Fastly. Okay. All right. We want to remind our listeners that we are not financial advisors. Anything we say or discuss here on chit chat money

is not formal advice or recommendation. Thank you guys for listening. We'll see you next time. We'll see you next time.