Chit Chat Stocks - Brad Freeman | Boeing & SoFi

Episode Date: February 9, 2021

Brad Freeman joins the show this week to give his thoughts on Boeing and SoFi, as well as share his investing story. Listen in as Brad gives his insight into what Boeing's future may hold. Before the interview, Brett and Ryan share their favorite stories from the week. Enjoy the episode! Follow Brad Freeman on Twitter: https://twitter.com/StockMarketNerd?s=20 Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Subscribe to our YouTube channel: https://www.youtube.com/c/ChitChatMoney Follow us on Twitter: https://twitter.com/chitchatmoney Visit our website to see more from your hosts Ryan and Brett: https://www.chitchatmoney.com Timestamps Stories | (2:16) Fintwit | (28:30) Interview | (33:59) Hot Water | (1:06:52) Buy-Sell-Hold | (1:14:36) Anecdotal Evidence | (1:15:06) Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. Today is Tuesday, February 9th. Today we have an interview with Brad Freeman, sort of our age, good investor. I like his stuff on Twitter. He writes for The Motley Fool, a lot of fun, engaging conversation. But before we get to that, we have our stories for the week. What are you talking about? uh yeah so there's a lot of stuff out there uh you know um i don't know a lot of news out there that people have been following but there was a good interview with stan drunkenmiller who was one of probably my favorite modern investor after buffett uh so he had a lot of good insights and i thought we'd talk about what he said in relevance to you know the markets over the next few years um so yeah okay and i'll be talking the hindenburg short report my new story is called hindenburg versus chamath uh could be hindenburg versus clover however you want to say it uh but as always then we have current state of fin twit which is interesting um hot water buy sell hold and

anecdotal evidence but sales pitch time our friends it's uh seven of us you can use our code ccm at checkout you get ten dollars off it's only seventeen dollars typically so now you've got seven dollars your first month it's great and you know what i'm going to do is look up currently what their returns are they haven't they've been around for what 11 months now so almost a full year and their average return 77 the s&p 500's return of 21 so they're doing quite well excited to see who their new analyst is going to be it's got to be someone gotta have seven it's going to be someone yeah they do have to have seven they put the seven and seven invest uh but yeah i mean the returns speak for themselves for uh that team over there all right here you go

Welcome to Chit Chat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guests is not formal advice or a recommendation. Now please enjoy this episode. Welcome in. I'm going to kick things off. I've got Hindenburg versus Chamath. So if you've been paying any attention to this, I guess we could call it a debacle, but Hindenburg Research.

Debate, yeah. Hindenburg Research, they tend to do some like, they're like investigative investing i guess is a nice way to say it but they uh they took down nicola so yeah well that company's still trading at 10 billion dollar valuation they took down trevor milton their due diligence is a lot deeper than the individual investor uh they are going out getting you know calling people former employees uh customers trying to sort of find darkness i guess uh in some of the businesses and so they released a pretty scathing uh short report on clover health which was a recent social capital SPAC. Hindenburg, they said they've been investigating Clover for about four months leading up to it, leading up to the SPAC. And they claim Clover

misled investors when selling equity to the public. So the quote from the Hindenburg report says, critically, Clover has not disclosed that its business model and its software offering called the Clover Assistant are under active investigation by the Department of Justice, which is investigating at least 12 issues ranging from kickbacks to marketing practices to undisclosed third-party deals according to a civil investigative demand similar to a subpoena that we obtained yeah you gotta you gotta disclose that i mean right there that's just a giant red flag yeah and says uh so i guess if you don't know what clover health does i really didn't but they are apparently like a patient-centered data platform so it organizes all the medical info um that's you know most

people probably know more about the business than i do but there were a lot of accusations in this report i'll go through a few of them most of the sales are driven by an undisclosed related party deal and misleading marketing targeting the elderly so apparently one of the former employees said that the sales most of the sales are generated by an outside brokerage firm controlled by clover's head of sales so they say it's an independent outside brokerage firm And they don't even mention – I believe they don't even mention the firm. They just say that their software is best in class and that's why they have all these sales. But the former head of sales reportedly tried to cover this up by putting the brokerage firm under his wife's name, which is a bit of a red flag.

They're hitting all the bases here. Yeah. And then they also have a subsidiary that was barely mentioned called Seek Insurance. seek makes no mention of clover on its website they even say on the website we don't work for insurance companies we work for you despite being owned by clover uh an insurance company so another bit of a red flag there and then they interviewed some doctors and former employees and one of the doctors stated the software is embarrassingly rudimentary and a waste of time but they they pay the doctors to use them so they use them um and they say explicitly that they

don't do that so another red red flag and then chamath came out with a response clover came out with a response too but so just explain for anyone that doesn't know because why he is you know in a relationship here yeah chamath runs social capital he's been doing a lot of spacks which is i guess an alternative way to take a company public you get the the sponsor which in this case is chamath or his uh combination social capital they have different subsidiaries but uh They get a bunch of fees to take them public and then they can resell that equity to the public. So they're kind of giving it – they're – They're blessing it almost, yeah.

I'm putting it in air quotes, but they're taking companies – they're giving companies to the retail investor before the investment banks. They're trying to democratize that process, but it feels – Rushed. Rushed, I guess, in some cases and maybe exploited in certain cases, but – Well, the fees are large. The fees are large. Yeah. Yeah, and so Chamath, obviously, he said he did his due diligence and he put a lot of work in, I guess.

Well, one pager. Yeah, and they're selling – I mean they're reselling stock to the public essentially. And so if you don't disclose anything, obviously, that's illegal. It's criminal. And so he stated basically a rebuttal and I have one quote here. It says, in foregoing new ground and being part of a regulated industry, clover expects to receive requests for information from governmental entities i don't think an ongoing investigation doj investigation is just a request for info

maybe the fda or something like that you know the health care medicare stuff like that you'd expect that regularly but not uh the department of justice right yeah and it's either way you should disclose it like uh yeah yeah you should definitely have to disclose that um and he goes on to say that he wishes that Hindenburg had contacted him or Clover before putting this out to the public, which is sort of a bad sign. The response felt super vague. I was expecting him to come out and say these are all false allegations or something like that, but it seemed to be more focused on the accuser and not the accusations, which is a red flag in my opinion. That is what Trevor Milton did and we know how that ended. The famous Instagram live, right? That's when

i was gone this summer that the whole thing went down but there was like the famous right yeah he answered questions from investors or whatever he just took to instagram live and said you know uh people that short are bad they don't provide anything of course to the world which if this is a lie and they're exploiting not only uh investors but potentially elderly people um Um, this shows why shorts exist. Yeah. And Hindenburg isn't even shorting Clover because they understand, I think they were saying like, you know, markets are kind of crazy right now.

Right. So they didn't even short it. This is kind of what a short report would be like, but I love following short sellers. I love following Chanos, Mark Cajotes, all the other ones down below because they are that filter, uh, to help, you know, like if they can filter out a company like Clover help, that gives me more confidence that the companies I'm investing in are, you know, on the up and up whose side are you on here i guess uh i don't know if you're the judge um did this short report it was pretty comprehensive no the combination with the

doj investigation and the seek insurance thing i think the seek insurance thing was the biggest like whoa like okay like they clearly lie on the website and they're lying to their customers i I mean, that's not – I mean, that one's not even refutable. So, that one makes me a little queasy. And they've had, I believe it's three COOs, three CFOs, two general counsels in the last four years. That's always a red flag. Oh, 100%. 100%.

Yeah, I mean, this brings back to, you know, the SPACs. We kind of – we talk about and we talked about it specifically with Miles last week. We were like, well, you know, the SPACs will be great in the long run because more companies public. It will be great. They'll all get audited eventually. but we kind of are in the camp that 90 of these things are pretty much bs so for the time being is i think it's a clear example of why we here uh just totally are avoiding spax at all right now now maybe early years yeah yeah now maybe in three years if some of these companies are doing fine

whatever you know check them out them but until they get a fully audited proxy in 10k i mean i'm out like yeah all right well that was my news story what do you have okay so this wasn't really news but uh i'm calling it insights from the truck who is probably my favorite investor that's you know not buffett like i said before and i think if i would have re-ranked you know my top three investors of all time i forgot about ed thorpe as well i'd probably go buffett truck and miller ed thorpe those would probably be my three i think that's really solid thorpe is one of the most but he underrated he really didn't have his career was short yeah but he's doing it privately now is he still doing it yeah it's just not open outside capital yeah they had the whole thing

with the you know that uh the other fund in like new jersey was doing bad but that's a whole nother thing but drunken miller was on with goldman sachs for some reason goldman sachs is a youtube channel that's got a lot of quality content it's kind of weird that they would be doing it but it was a 20 minute discussion with goldman um and he had a lot of quotes from it that i thought would be kind of good springboards to maybe talk we can talk about some for a little bit some for a lot um so he said one his current framework one framework excuse me is one word buckle up he says i've been a cio since 1978 which that's very long that's 42 years and he's been investing since the early 70s and he says i've been a cio since 1978 and this has been the wildest cocktail i've ever seen

does that make you what are your thoughts on that just a little making you nervous or cautious uh keep going just go through sort of all the quotes and i can talk about it after okay uh next quote our current economic recession was five times as large as the average one in the united states but happened in 25 of the time yeah well we experienced that that was that that did happen in three months we've added more to the deficit than the last five recessions combined uh that one was pretty eye-opening too says asia has defeated the virus and is not barred from their future the u.s is the opposite we are losing to the virus although you know the recent weeks whatever we've been doing pretty well but we've also barred from our future with you know

all the deficit spending he said we may increase this record stimulus in combination with the greatest pent-up demand since the 1920s that can make the world look extremely different than it is today you want to stop here any thoughts on that one sure okay so first of all the recessions or not sorry not the recession stuff the inflation stuff i'll never have a grasp on i really won't because you mean stimulus and deficit stuff yeah i have no i would always imagine when i hear some of the numbers that come out so five times whatever it is we spent more uh than the last five recessions combined that would well the economic contraction was five times larger yeah but then it says in three months we added more to the deficit than the last five recessions

combined yeah so in combination with that yeah it just feels like when you hear the headline numbers inflation alarms go off in your head but then there's all this modern monetary theory stuff going on that's like inflation doesn't exist we've been trying and inflation has been lower than we wanted and so i just have no expertise on it and i really it doesn't really adjust yeah Yeah, it's interesting to hear someone like Druckenmiller talk about that and you kind of have to have that expectation when you're investing, all right, I mean, if inflation comes, if it goes up to like 4% to 6% or something like that, you know, you have to, you should be ready for that for your portfolio, but it's not something that we can, the way we

invest where it's not something that we're going to be like, all right, well, now we're going to move all our things into shorting the US dollar or some stuff like that. that's the other it's kind of it's it's good to you know if you understand that that can happen it won't surprise you if it does the other thing about this stuff is i feel like a lot of the famous fund managers always go on and talk about how difficult or in a shitty spot we are and then their portfolio doesn't reflect it at all so i feel like taking this with a grain of salt well he said i mean he said in his portfolio he basically owns a lot of stuff he owns the basically fang he owns uh cloud names he's big on cloud which we'll get and it's another quote here he

owns a bunch of commodities as his inflation hedge which is not something we do but that's something he likes to do so i mean i think his money is where his mouth is but we'd have to like yeah but saying like this is i don't know like sound the alarms on the recession but then 50 am i holding his fang like well if you watch the video he wasn't really sounding the alarm You're just trying to contrast how like, all right, we have this huge contraction and it's unprecedented and you have all the stimulus, so you have to take it into like two sides. Like, all right, on one hand, the recession is doing really bad for the actual economy, but on the other hand, there's going to be the stimulus and pent-up demand. You can see the vaccine in the next few months. So it's kind of hard to look at that situation and say, all right, well, there's a ton of different outcomes over the next few years.

yeah i do like the idea of a bunch of pent-up demand we've talked about this everyone understands this pent-up demand but combination with the record stimulus you don't know i mean it just seems like there's a lot of volatility like within um not just the economy but like cultural trends or whatever there's just going to be a lot of change over the next year a few years i know this summer no one's going to be standing inside seems like i don't know like even if people are like all right stay home or whatever like i don't think people are gonna actually do that they're gonna start traveling they're gonna do what they want to do right i would hope i guess but i don't know i don't know if restrictions

will ease up that fast uh well all right that's yes i guess that's another thing that we can't control yeah um but all right keep going all right next quote he said this is kind of one on the inflation he says my overarching theme is that inflation will be higher relative to what policymakers think but he kind of talked about and this is again this is something that's out of our expertise he said that he's using that where he's going long commodities right but he's also oh gosh he's also long he also owns really short-term u.s treasuries or something like that to kind of show like all right i just don't want to have any exposure to this inflation because if you know the fed keeps lowering interest rates keeps them artificially low and uh gosh what else

what they do and you know the treasury yields stay super low then then the inflation might not be there but again that's really not something we care about i'll go into the next one he says you mentioned the cloud i'd say we're in the third or fourth inning pre-covid we were on the first but during covid we transitioned to the third or fourth what are your thoughts on that yeah i'm not sure that's super unique i think we saw that come out of like sundar pichai early on during covid he's like this is accelerating 10 years worth of adoption in a few months well yeah but what about the third or fourth inning part you know like that's kind of interesting that someone like that would think and it's kind of impressive that he's what like

70 years old and he can understand i would hope that when i whatever in 2050 if i'm still doing something like this that i could understand what the cloud is third or fourth i guess a good representation of it might be Bezos stepping down and having the AWS guy take over

as CEO you know because that's kind of saying like this is the main this is what the most important part

of our business is now so maybe I mean if it's there I'm not sure they would do that in early

early innings and they definitely want to do that in late innings yeah and I can't I think third or fourth inning is probably correct

because if you look at the numbers I think cloud penetration is only Oh, gosh. It's in between 15% and like 40%. I don't know the exact number, but we're definitely not majority cloud yet. And it seems like 90% of things will be in the cloud from what I've read.

Are we really not majority cloud? I can look it up. No, I think you're just thinking that as an investor. But I've honestly seen that, or we're not very far away. Or sorry, sir, we're not very far in. If you look at the investment where all the IT spend is, I don't think the majority hasn't moved to the cloud, but the prediction is it's going to.

And it kind of just makes me think, wow, you know, AWS is, or Azure, if it was a separate company, they're probably going to be the two of the largest businesses in the world. And it's definitely priced in, but it's not, it feels like it's almost a guarantee. I feel like people have been saying that for five years. Well, it's, no, they haven't been saying that for five years. But, you know, for like the last, even leading into COVID, people were like, you know, I would love to own AWS on its own. It's going to be a monster. I think you're just looking through your worldview because we are trying to look at it through an investor's lens, but now I think that's very accepted where we were talking to people that thought that or whatever, AWS is going to be the biggest company, but now I think that that's kind of the common knowledge that this company is going to be the biggest one in the world. Yeah, you can say that.

All right, keep going. Okay, next one. All right. he talked about how you know he said the thing about how asia has been doing quite well where if you just look in general one they defeated the virus and two they didn't have to take on a lot of debt for their country so that's kind of a combination of all right those are doing a lot better than the western countries and he says you know i own names in taiwan south korea and i thought this was just a funny anecdote he said like the rest of the world we own c limited in singapore

so i was like all right well everyone does i guess every hedge fund does uh he says i've never used VAR. It's very unsophisticated. I watch my P&L and if it starts acting in a strange manner, my antenna goes up. It's weird to think that he's one of the most experienced investors in the world and all he's doing is just like everyone else. He's watching his profit and loss statement and if something strange is happening, all right, let's investigate. Yeah, it always feels like Like, I don't know, shouldn't you be focused on the companies you own in your portfolio and then sort of manage it from there out instead of, like, trying to take a worldview and let it reflect your portfolio?

Yeah, and VAR, which people might not know what it is, is called value at risk, and it's got probably a lot of quantitative stuff, and it's very complicated, but it's called a statistical measure that is used by something like an investment bank to estimate the potential of future losses. this is kind of the big thing in that movie the margin call where they're looking at the you know the var right and it's like oh wait no we calculated this wrong or risk parameters on this you know whatever housing bonds whatever four or five percent go down and the whole thing goes down i just think that stuff's really overrated like i mean sure yeah you can look at historical trends

but you can't predict the future and it's like all right just because historical volatility was super low all right does that mean you can lever up eight times uh i don't know that feels a bit it just feels way too risky for me you hear about the people that find like big mac big like hidden macroeconomic bubbles that could take something down like the big short margin call like those movies you hear about them because they're the success stories but i feel like there's probably a lot more people that have tried to call top on some macroeconomic bubble or something small that they think is going to have ripple effects throughout the economy and they've just been outright wrong so what are you saying in relation to var i don't know just don't take just focus on

your pnl like drunkenmiller says focus on your own oh yeah i mean portfolio that you have and not the macroeconomic world oh yeah var i mean using having too much reliance on statistical measures or var or whatever looking at historic volatility all that stuff is what led to the taking too much risk where these big you know big short people can come in so it's like yeah i mean if you're an investment bank i don't know it's just i think it's just a excuse to use leverage but again it's a little over our heads there okay keep going uh all right last quote and this one is again it's a little more macro he says the reason i'm worried about western capitalism versus asian capitalism this is kind of the big theme of the talk is that we don't practice it anymore he says the fed has

bastardize the most important metric in the world which is the cost of money and we also have crony capitalism and we've talked about crony capitalism we invest in crony capitalism alter your group full disclosure that's something we own um which is regulated a regulated monopoly basically but yeah inadvertently well it's still regulated monopoly basically is it crony capitalism like you're working in tandem with the government are they i mean i kind of know i would i would say that like they were accidentally insulated because the like marketing practices and all that crap had the effect regulators weren't hoping for yeah i think they're i mean i think they're quite happy i mean they gotta go to court every year it's been like 70 million a

on legal costs i think they're quite happy yeah yeah i mean they're working in tandem with the government well i thought that was what crony capitalism refers to is like sort of yeah yeah entangled into yeah regulatory it's i think in general it's kind of a regulatory capture you know it was more like like uh government credits uh government credits for yeah for energy and stuff like that i mean in general that the government credits for um you know fracking and energy and stuff they've done i think it's hundreds of billions in that type of thing you know for the permian basin down in texas and those companies have never turned a profit i mean yeah but what about the relation to the cost of money now that's kind of like keeping it you know i

don't know what does it mean by that so the interest rates so the cost of money it's like all right what are the interest rates on the bonds you're looking at now you see that with a lot of companies these days i'm looking at a lot of growth companies getting convertible notes with zero percent interest due in 2025 they're taking advantage of that i'm looking at a lot of companies again like altria group refinancing their bonds to get a way lower interest rates than they used to have i think they just did less than three percent interest on a 2032 bond which is crazy um i don't know it seems like they're trying to artificially do this they're trying to prime the pump you know what i mean and can they do it just i don't know what the outcome is going to be

yeah that's it's that sounds yeah it does sound like they are incentivizing like extreme borrowing but i don't know how that ends well they're incentivizing leverage and i think you just have to look at it from an individual company's standpoint all right is this company over levering too much or if they're using leverage do they have the consistent cash flows to pay it off or are they taking advantage of these low interest rates again doing really cheap convertible notes or trying to refinance, you know, with lower interest rates. I mean, it's not a way to look at like, all right, we don't want to like, you know, a gold bug perspective,

which we think is kind of a little illogical or not using common sense where they're like, all right, well, they're just going to print our way to blah, blah, blah, you know, crypto is the way, you know, stuff like that. But I think if you look at it on an individual company perspective, right, you'll look at, all right, who's actually taking advantage of this? And who's overlevering themselves? Yeah. I want to say – I don't know. It's just on a company-by-company basis, right? Yeah.

It doesn't affect my portfolio, I guess, is the way to – and I'm not even sure I would make changes to my portfolio even if I knew or had a better idea of what the outcome would be. Well, outcome of what? like this zero interest rate environment i'm not sure i don't know it just feels like the entire discussion somewhat over our heads uh and without i think it's well it's not i don't think it's hard to understand the cost of money lowers yeah but what's the yeah but what what outcome does that lean towards okay well again i say altria group a company we own their finance team is refinancing a lot of their loans right so they used to have interest rates on a lot of this stuff some of it is even at like nine percent if i'm remembering correctly and they're doing tender offers to

replace those right selling it back to the public so they're taking advantage of that i don't think it's uh i see what's happening but i don't see whether that leads to a better or worse outcome for the company in the end well i mean they have they get easy yeah they have easier financing but at the same time there's going to be companies that are levering up because this that shouldn't be levering up so i don't know yeah yeah exactly what outcome it provides no i think it's not something the framework isn't the cost of money the framework is looking at the companies i mean again if they have to pay less it's not a good thing or a bad thing it's you look at it all right is this company paying less than interest payments right or are they going to keep more of

it and return it to shareholders but then if you look at it on a growth perspective if they're able to raise a convertible note do in 2025 and basically get 500 million dollars in free money that's going to actually dilute shareholders and then reinvest into their business someone like peloton's doing that now they're taking more of a risk maybe i mean i think you just gotta look here's okay so then my question is what's the point because he's talking about it as like a bad thing well on it yeah because he's looking at it as a macro investor he's got billions and billions of dollars so basically his wealth is tied up into the american economy yeah but he's making it sound like it's gonna have poor implications oh i mean i or maybe i'm maybe

i'm mishearing the quote but it sounds like he said he's worried about the most important metric in the world well he's worried about in general over leveraging right for companies okay so there's a lot of companies the bad side of this and the companies that we probably wouldn't own are these what quote zombie companies like an airline that are taking on a bunch of debt getting a bunch of money back from the government you know crony capitalism right sure all right and they're not they're not viable entities if you're a zombie company you can't pay your interest payments Now, do we want those companies alive, or is it actually a free market economy? That's kind of the tough question.

Again, from an individual investment perspective, it doesn't really matter. Yeah, let's get current state of fit into it. Did you have anything big this week? Okay, well, I was going to ask about the Clover Health debate, but we already talked about that. All right, there was a fact from Morgan Housel that he tweeted that more SPACs were raised on Friday than in all of 2013. Any thoughts on that? make you scared cautious i think it's a net positive but uh well that's i mean there's going to be a lot of bad ones but i mean the end goal is that we have 50 more public companies

right in like five years if it keeps up at this rate yeah but i don't know if that rate's going to keep up it just it feels so bubbly in the short run i just want to i just we i mean we're on the same page but we would never touch any of these it seems like all these we looked at what oatly going public at 10 billion dollars like just an absurd sales multiple what about dogecoin what do you think dogecoin that was big all over twitter this week um and frankly there's nothing that makes me feel like worse for the retail guy than the richest people in the world touting it yeah i mean even if like because that stuff sucks for some i don't know for a lot of people it might be a joke or it might be ironic that dogecoin does well but a lot of dumb people might be uh

putting real money on it which whatever i guess that's their own problem but uh yeah i mean dogecoin the guy that made it he did in a few hours or something like that like eight years ago and he made it as a joke kind of as like all right look you can make a cryptocurrency whatever backed by dog and now it's taken on a life of its own i kind of have the framework that it's a mean back currency so it's such a joke that people are going to take it seriously and it doesn't mean anything it doesn't mean the price is going to go up it doesn't mean it's going to go down i mean it's a pure speculative asset it's uh it's fun to watch but uh it feels like yeah the rich people are taking advantage that the only the only malicious part is like what you said the rich

people are uh kind of pumping and dumping it it seems like yeah okay so i saw a list of some of the businesses that advertised during tom bird his first super bowl i don't know if you saw this um so i'll go through them aol blockbuster radio shack circuit city comp usa sears hot jobs yahoo voice stream wireless gateway computers is it a bad omen to advertise during the super bowl Well, I mean, that might be resulting because, I mean, Coca-Cola and Nike advertise every year, you know, and people are probably, you know, searching for those bad companies. But I think it shows that, you know, capitalism and whatever, the market is destructive. Like, most companies fail. So, if you're betting on a company, you got to think either, A, they're going to be around a long time or, you know, you're getting a good price.

because historically unless somehow this time it's different the companies that are leading today like you know then it was aol yahoo won't be the ones leading in the future in the next decade so yeah okay but a little bit of a concern nintendo had an advertisement we we uh do own nintendo yes So, are we owning the AOL? I don't know. The Nintendo one was okay, right? I mean, okay, there's a difference between a company like, what was it? There was like a Carvana competitor that was advertising.

That seems dumb. Yeah, that one seems dumb. But if you're Coca-Cola, Nike. Companies that can't afford it. No, it's not necessarily you can't afford it, but Nintendo fits this category. if you're trying to if your product is for everyone it's fine capital allocation right because coca-cola just needs to have that market awareness of they're the brand gives them that pricing power over the stupid kroger one or you or if you just have tons and tons of cash

and you don't need to put it elsewhere yeah or you don't need a bunch of money to reinvest to do well in the future i guess that's sort of nintendo so i don't mind amazon does it all yeah that's an example of uh if your product or service is for everyone or maybe for every family then a super bowl commercial can be worth it but if you're a very specific product what was their weather tech too i was like they ran like three yeah weather tech look i get your brands high now that you're you know patriotic you know you're in the usa you never outsourced your stuff and you sounds like you have a good business going here but no one really cares sounds like you have high overhead costs and it sounds like you don't have the kind of money to be running

super bowl ads but all right yeah that's all i had for current state of finn twit you got anything else i did not i was going to talk about clover here if we didn't if you didn't cover it so all right well next we have an interview with brad freeman any highlights for you uh yeah i mean we We did talk about a SPAC here, SoFi, so I want to say fair warning. We are skeptical on companies like that, but SoFi is very interesting. It's probably the most interesting SPAC for sure. I've looked at. There is the stadium red flag.

They do name a stadium. But, yeah, I mean, he goes over. That's another bad omen. He goes over. I mean, their numbers look great. The financials look great there. That was probably the most interesting one. And then we talk about Boeing.

Yeah. Yeah. I mean, two different companies, but two insightful discussions, I thought. Yeah. All right. Here you go. 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? Ah, 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. Today we are welcomed by Brad Freeman. Brad is a writer for The Motley Fool.

He is a popular FinTwit presence. You probably recognize the name if you're on Twitter or you've read any of his articles. But I thought a unique place to start would just be your background to kind of get through that. So why did you pick finance? I know you're pretty young, right 23 yeah 23 years old okay uh so why finance um so an undergraduate which was not that long ago uh i was in real estate pursuing that with internships and classes and um all that fun stuff and i just um honestly found it kind of boring to be candid uh and very important to me to enjoy work and enjoy uh the 40 hours a week or whatever it is um that i'm going to be spending my my life getting to work so uh just kept searching and and kind of kind of attracted to companies because

they move a whole lot faster than buildings generally do um and just kind of the free flowing nature of of news constantly flowing um and seeing your your ideas over a long period of time kind of come to fruition really uh really i guess excites me and and doing it and researching and reading SEC filings and all that fun stuff that most people think of as kind of boring and nerdy that I thought real estate was boring and not, yeah, just boring. And so investing to me doesn't really feel like work. So that long answer for your short question is that, I guess. No, that's good. And you write for The Fool now. When did you start doing that? sure so last april started doing that um so been about almost a year now shout out molly full

all right yeah i know i guess we're all three writers there now yeah fellow molly fullers big uh foolish podcast but let's get into your investing process that's uh what people probably hear to listen about uh how do you source ideas do you have any structured process you go through or is it more qualitative versus quantitative and maybe something like what metrics do you look at a lot? I know that's a lot of questions, but we can get into at least some of those. Sure. So for sourcing ideas, I guess I'll start with kind of investment philosophy, split into two buckets. And the effect of this is what a lot of people call a barbell approach. So the first bucket would be kind of the deep value black swan companies, the companies dealing

with kind of a crisis and generally not all that loved by markets. And for that, kind of just watching CNBC's background all day long and existing in the financial news world, I kind of come up with inspiration for ideas there. And SEC filings are how I kind of develop those ideas. And what I'm looking for there, obviously, the margin profile and the revenue side of things are going to look really bad balance you might look pretty bad but just uh what their what their kind of industry and what their environment looks like what their competitive environment looks like um when when they recover or if they can recover um will they be in a position to

continue on to pre whatever crisis they were dealing with um and kind of industry compounding to a growth rate or cagger is a a key thing that i look at there um and also their their ability to access funds, I guess, your credit markets or equity markets is important to me for bridging the gap. So yeah, and I guess the other bucket would be what other people are kind of more interested in hearing about the high growth, young disruptive companies that fall into that disruption bucket or legalization bucket. So think sports gambling or cannabis exposure in both of those. And there I'm looking at revenue growth. I'm not looking for profitability, although that would be awesome. But I am looking for margins to be improving rapidly. Generally look more at

the cash flow statement than the income statement. More interested in cash flow from operations and free cash than how good a CFO can make net income look on the bottom line. So I guess that's worth noting. And yeah, so that's kind of rounds out the philosophy of how I operate. Yeah. Okay. So when you're looking at the growth companies, what things besides revenue growth are you looking for? Are you looking for a leverage for profitability? Are you caring about cash flow per share? I mean, when you're looking at these, you're thinking, okay, they're unprofitable now, or they might be getting close to break even. But what kind of things are you looking at on like a three or five year time horizon yeah so it's just it's it's more so so what the opportunity

looks like so total addressable market or serviceable addressable market um where where they are in terms of like their margin profile again on their their like operating margin or cash flow from operations margin i'm not looking for that to be positive i'm not looking for it to be impressive like 40 for microsoft or something but i am looking for it to be moving quickly which which kind of tells me that management is able to generate new demand and new interest off of their existing base of assets without solely needing to spend more and more and more money to do so. So yeah, that's, I think more, that's kind of the key driver of how I assess the quality of growth in companies. Okay. And like position sizing, do you hop right into a five or 6%

position or do you kind of build it up over time how do you go about that sure so i split again between those two buckets so for the kind of deep value i uh have so initially i'll do one and a half percent cost basis out of the holdings and then slowly dollar cost averaging over time on weakness um or just noise because i mean it happens all the time in markets uh so take that up generally to 3% on a full position. And then for the speculative, disruptive, high growth companies, it's starting off at a 1% cost basis and take that very slow, even more slowly up to 2%. Okay. And then what about how many holdings do you have over time? Do you have a range for that or does that not really matter to you? And I guess we'll just answer that question first and

then we can move on to the next one. Yeah. So I think 30 stocks and then some Bitcoin small position there uh number of positions isn't super important to me i'm generally just looking for opportunities that i can really get behind and and and have conviction in through kind of all but inevitable tough times in the future so however many positions i i think of in that light i'll own um unfortunately i mean i write for the motley fool so i'm able to allocate a lot of time um to researching all these positions so i definitely understand the argument people have for um 10 15 positions any more than that how can you even keep track but i do i love to nerd out on this stuff as my twitter handle suggests so uh yeah no no cap for me personally okay and we're

going to talk about two companies specifically very different companies uh boeing and sofi but we'll start with boeing i believe this is your largest building if i read your uh twitter portfolio update correctly uh so what's sort of your thesis there just broadly because it's not a name a lot of fin twitter's own sure so that that is kind of a double black swan event um so kind of i mean the past 18 months for this company it's hard to imagine dealing with with a more negative news flow in terms of the two tragic crashes in terms of the triple seven x delays in terms of the COVID-19 pandemic is absolutely destroying air travel. But through all of that, so it's a global duopoly, which I really have a bias towards.

And the effect of that, I think, and Boeing and Airbus came out with this late last year, is that the 20-year demand forecast is unchanged in terms of dollar amounts from this entire crisis. And Boeing's backlog, it's taken a hit, but it still offers them several years of production once demand finally recovers and we can get these vaccines distributed. I have no clue when that's going to be, but it's kind of a when, not if. And whenever that does happen and we can return to some kind of normal environment, Boeing will still be that global duopoly existing in a growth industry that was growing before COVID-19 and is supposed to revert to growth at some point eventually in the future. Did you own them prior to the pandemic or did you sort of buy in on the bad news? Sure. So the one and a half percent kind of that I talked about was after that second really

tragic 737 max crash and then filled out the position all the way down kind of, that was not a fun few weeks, but filled it up to 3% cost basis all the way down during the pandemic. um and yeah it's it's now like you said my largest position today all right and then the concern that a lot of people have with Boeing is the debt load and the pension liabilities um I know that they I don't have the exact numbers here but does that factor into your thesis at all or do you think they'll be able to cover with that backlog sure um and that's that's definitely that that is the concern. So it's a really, really good to highlight that. I think it's somewhere around $60 billion in long-term debt. So kind of two main concerns there is, first of all,

can they pay off the debt? It's currently a zombie company. I mean, their EBITDA doesn't cover interest expenses currently. They have none. And kind of the two hints that they can, to me, was the way over-subscription they had on that original debt deal of $20-something billion that they offered in the heat of the pandemic, they got a far lower interest rate than they were anticipating. It was seven times oversubscribed. It could have been six times. It was six or seven, one of the two. And then last week, they were able to take out another $9 billion to pay off some of their other debt at a far lower interest rate, part of a $13 billion debt deal. So the credit markets are telling you that they have faith in the future existence of Boeing. They

have faith in their ability to meet these kind of daunting liabilities. And the other concern is the EV enterprise value is going to recover a lot quicker than the market cap is before they pay off any of this debt. So it does put a lower ceiling on the equity value to the recovered equity value in the future, whenever that is. Again, I have no clue. It could be next year, It could be three years. But the key thing to note here is they were they were putting up 15 billion in operating cash flow at the peak of their cloud. So before all this kind of sugar, honey, iced tea hit the fan. So while the debt load is cumbersome and will take a lot of a long time to pay off for several years, the time horizon I kind of take with with companies like this is as long as it takes.

um so kind of i mean for for bank of america and the financial crisis it was it took 12 years for me to exit that position and and i guess now uh with boeing i'm anticipating holding this for a very long time so i guess anyone listening uh with kind of more of a trading philosophy i or a short time horizon or looking for a quick pop that's not at all what i i kind of think here I just think that the industry dynamics with having that global duopoly and the strong cash flow they had pre-pandemic and the really long-term forecast being unchanged, regardless of all this stuff that they've had to deal with, it kind of gives me hope that they will be able to handle all this new credit and they'll be able to survive long past this pandemic. Right. And yeah, it seems like if you're not a trader or anything like that, you have to have a really long term timer as in for Boeing. And an important part of that is the management. So they brought a new management, they fired, or, you know, the old one resigned or however that works, but the management got let go. What are your thoughts on the management changes and the new team? How are they doing? yeah i wasn't the biggest fan of them hiring a ceo from kind of an inside hire the management team changed but it didn't it's not all that new uh if that makes sense they're they're all they're

all boeing veterans so i kind of took a wait and see approach there and i have liked how they handled the 737 max crisis i mean the old leadership was giving you pushback timelines of when the 737 was going to be back in the air it seemed every other month and just kind of destroying any any sense of credibility they had so i think him taking the position of this is not at all up to us it's up to the faa and it's up to other regulatory agencies is what he had to do and i'm glad he did so i definitely don't think he's a superstar yet i mean he might i might think that in a couple years but kind of passing grade so far what uh it's easy to sort of highlight the negatives with Boeing just because they're in such a hard time right now but do you have any

sort of growth opportunities or growth avenues that you think they could go for or is it mostly just fill that backlog yeah so the the developed nations recovery is gonna I do think that will be a growth story at some point I mean I just I looked it up well you're asking me the question um so don't don't no one be impressed I don't have this off the top top of my head but three percent compound annual growth rate for the aviation industry as a whole so so they they'll benefit from that growth and from the refreshes that that are definitely going to come especially with all the delays that have happened to recycling old models from the pandemic so i think that'll revert to growth the developing nations are going to be the real growth story within the

commercial aviation segment um and then kind of within government services and defense that'll I think that'll be steady, but not a real growth story, more so a consistent cash flow provider. But there's a lot of venture capital projects within the firm that kind of go or fly under the gun. So electric planes, autonomous planes, drones, they have a pretty sizable investment in Virgin Galactic. So yeah, it's 20 million upfront, probably worth over 100 million now. So not nothing gigantic, but interesting to note. So I think that the space economy that everyone is really excited about, I think Boeing is going to be a bigger part of that than people think, than people are giving them credit for. So maybe if Cathy Wood adds it to her ARK Invest fund, then everyone will love it. It'll become a momentum stock. There we go.

Yeah, exactly, exactly. A meme stock overnight. But yeah, I do think the core business will be really strong. It looks awful right now and there's no avoiding that, but it will be really strong again at some point. And I think growth probably will come from that space-oriented part of the company. Okay. And you mentioned this a bit before, but the 737 MAX was the concern even pre-COVID. Do you think that concern is gone now? I know a lot of people probably don't follow it, you know, as much as it was when it was the center of the news? Or does that not matter at all going forward? Have they put that behind them? Yeah, I do think it'll take some time. Oddly enough, the pandemic almost bought them some time with, with kind of earning back public

trust when the demand's not really there anyway. It's kind of a weird thing to say. And there's, again, no kidding around how terribly they handled the Mac situation. But I do think that public trust will come back some people or i guess a large portion of flyers don't really know what model they're flying um and then the rest of people don't usually have a choice um anyway so i think i i'm sure there will be some uneasy people on flights but but i'm thinking that um that yeah it'll it'll hopefully enjoy a a recovery once this is all over i mean the ryanair ceo talking about like he was asked do you want to do you want us to rebrand the 737 max or do or should do you think we should and and he said i don't give a darn i use that word what you

call it um just get it back in the air so so i think um there's a big sigh of relief that it's back in the air and now boeing can kind of recover with the rest of the aviation industry and with the rest of the um the recovery names that that will hopefully find new life when this awful crisis pandemic is finally over all right well that was a good you have any more right yeah i mean i didn't jot this one down on the notes page or the questions we sent you but do you think that they are too big to fail like do you think the government would bail them out if they had if air travel didn't recover or whatever like one of the new strains stuck around and the vaccine didn't treat it and they had a bad four or five years do you think uh government would

feel forced to bail now yeah um it's it's it's interesting because it's not it's not my favorite bull case but it is a pretty good bull case honestly the too big to fail argument i mean it is it is pretty vital to national security as a company uh from the defense standpoint from the commercial aviation standpoint and also i mean so the federal government didn't bail them out but i mean the federal reserve did kind of open the floodgates and credit markets for them to capitalize on that gigantic debt deal that got them through all of this. And they were one of the biggest beneficiaries of that. So shout out to Powell for getting Boeing through this crisis. But I do think that the too big to fail argument is valid for sure.

Right. And it kind of gives you that margin of safety, right? Where you think that whatever how you feel about governments bailing you out, if you're an investor, it gives you that downside protection. Is that how you think about it? Yeah, exactly. I think that's a good way to put it. Okay. SoFi. Let's talk SoFi. Yeah. We'll get a more exciting name in here. SoFi. They're in the news. I think they're SPACing. Very exciting. Which one is it? Yeah. It is IPOE. So it is a Chamath Palihapitiya. I'm sorry if I pronounced that incorrectly,

but it's one of his SPACs. Okay. And what is SoFi? Is there any particular part of the business that you like and why you're invested? sure so i'll start with i'll start with what is it and then go for the favorite piece part because there definitely is a favorite piece um so it started it started off as kind of so some stanford grads helping recent graduates connect to an alumni base essentially um and they after that became the first company to offer both private and federal student loan refinancing um and and they kind of this product snowball continued until uh where we are now um where they are trying to be

the what they say one-stop shop for all digital banking services all all financial services so save spend borrow invest protect is their um is their saying or helping you keep your money right yeah and then so what they call this which is kind of fancy talk i think for land and expand is the financial services productivity loop um so they're they're aiming to wow customers with product one and cross sell feel better margins and justify more investment and growth so it's kind of a good i think a good comparison is lemonade and insurance which i also own so yeah i think that they're kind of approaching that industry um in a similarly disruptive way so and kind of for reference of why they're they're doing this um so one loan product this

is an ltv to cac but variable profit to cac so consumer acquisition cost gives them about two times but when they cross out with another loan product or any other other product that at 10 so there's a very high incentive for them to to cross sell so they're really trying to kind of win the consumer over at every turn which again is sounds eerily similar to lemonade so that's the B2C arm. And then to answer your second question, and this is, I guess, my absolute favorite part of the company, is the business-to-business arm, which is what they acquired in April of 2020. The deal was a little bit over a billion dollars. I don't know the exact number, but they bought Galileo, which provides fintech application programming interfaces or APIs

for customers like Revolut and Chime and Robinhood. So it's not really ideal that my favorite piece of the company was purchased. That kind of makes me a little uncomfortable, but it was an organization and an asset base that I kind of had on my radar whenever they did hopefully go public eventually on their own.

So when SoFi merged with them and then went public, that kind of really caught my interest. So for reference of what they kind of bring to the table, and this is from Schmath, investor presentation. And I haven't been able to verify it in another source. But 90% they're saying of new neobank accounts are powered by a Galileo API. So they're really dominating the B2B arm and then also trying to have this one stop shop in the B2C arm. So that's kind of

in a nutshell. Okay, that's a good overview. And what are the financials look like? How are the margins i know a lot of people might can you know consider it as bank like uh but there's not really anyone to compare it to uh so you know it's kind of a wild guess on our what the margins are yeah i guess the closest comps would probably be whatever i don't own square so i'm not i'm not super familiar with how they disclose cash app but whatever the financials look like there i think would be a good comparison but for fortunately for our sake in their investor presentation they kind of split up financials by revenue segment pretty nicely. So lending, which is their most mature segment, so this is the loan refinancing and the loan issuance, they're anticipating a

25% annual growth rate through 2025 with 58% contribution margins. Their FIN services or digital banking segment, 153% annual growth through 2025. And I quote this, on path to profitability um so negative contribution margin margins i take that as currently and then galileo which is 55 compound annual growth rate through 2025 and 62 contribution margin so they put this all together and they're expecting to grow at 43 through the year 2025 um and and kind of looking at profitability from there uh they're they're looking to sorry let me just scroll through my notes real quick, expecting EBITDA margins. Okay. So they're expecting EBITDA margins to inflect this year from negative 10% to 3%. And their forecasts are pretty ambitious as you kind of

see with a lot of SPACs. So they're forecasting that 43% growth rate to get to 2.1 billion sales in 2023 with 23% EBITDA margins, a 10% gap profit margin, and then continue 35% growth for the foreseeable future thereafter. So the margins are kind of, like I mentioned or talked about earlier, heading quickly in the right direction. And they're anticipating a pretty large bump in revenue growth. So this is important to note, I think. They're coming off of 38% revenue growth last year, I guess, for 2020. And they're expecting that to jump up to 58% as Galileo and digital banking kind of takes over a larger piece of the pie for the revenue um the revenue makeup and their lending mature segment diminishes in size so there's a lot to prove here um i think

and and i i posted on twitter about this and i said this was kind of like a a buy with a very short leash they they need that 20 bump in revenue growth to happen they need this margin inflection to happen for me to continue being a long-term shareholder but if they do then i think there's pretty intriguing upside from here okay i have a concerning question for you they i believe they sponsor a stadium is that a red flag because i think stadium sponsors always do poorly yeah so to to quote the great michael scott i'm not superstitious but i am a little stitious um and yeah i i guess the sofa what is it the rams la rams yeah the new big stadium down there it's a cool looking stadium but it is sponsored by cover that up or something um but but yeah

uh what about uh do you think cuss do you think they're going to be able to take customers from traditional banks because brad and i have had this discussion on here about cash app um being able to take customers away from just traditional banking products because it always sounds good in theory but it's much harder in practice uh i mean do you think it's feasible for them yeah so i think that's why they're obsessed with doing everything, with doing the loans and the investing and the money products and the refinancing and everything you could possibly think of. There'll be more products in the future. So kind of to give you a couple of statistics, so 50% of consumers that they're surveying of tens of thousands of people have multiple bank accounts with 80% of those consumers

saying they do so because there is no one-stop shop to fit all these needs. So I think the combination of a pretty sleek user interface and and being this complete suite of tools uh i think is a pretty powerful one-two punch of value creation that that i will that i do think will allow them to continue user growth pretty quickly i mean they're what are they at today 1.7 million supposed to grow 75 through every year to 3 million so they're again their forecasts are pretty ambitious and they have a lot left to prove and there's no guarantee that happens but But their user growth has accelerated six quarters in a row, so there is a little credibility there. And so they are winning over new users, and hopefully that continues.

But I'll definitely be on the lookout for that. Okay, you kind of answered my next question, so I'll skip to the next one here. But what about this being a SPAC structure? And it's kind of interesting that we do this. I asked this question today because this is the day that the SPAC, the Clover Health thing, had their short report come out. And so I guess it's maybe maybe there's a little more scrutiny now. Does it worry you at all? Do you have any concerns that it wasn't sort of traditional public offering or direct listing or anything like that? Sure. So, yeah, good timing on the Clover Health deal, which was also Chamath.

So definitely relevant to this conversation. So being a SPAC, I guess it's not it's definitely not a deal breaker to me. I own three, this, Butterfly, or LGDW, and then Tattooed Chef, which is post-merger. Oh, and then CuriosityStream, so I own four. But it does raise the bar for sure and does shorten the leash for sure because you don't see IPOs giving you revenue guidance for 2025, and that's a lot of how these companies are driving interest and picking up shareholders. So emphasis on the short leash. It's important to take these long-term forecasts with a grain of salt, I think.

And it's really important to understand that a lot of them are not going to come to fruition. And as soon as they don't, it's kind of time to move on for me personally. So I am a very long-term investor until a company gives me a reason not to be. So I think kind of, I guess, an example, fortunately, I wasn't a shareholder, But a Nikola incident or something like that is a lot more common with SPACs than IPOs. So just keeping that leash really short and continuing to stay up to date with all the filings and making sure status quo is still status quo is even more important, I think, with a SPAC than an IPO. And also, I think it's, final note, really important to take valuation with diluted share count. So these companies will put valuation slides in their investor presentations based on $10

a share and based on pro forma share count. And then in the very fine print on the bottom of these slides, they'll say this excludes tens of millions of public warrants and options and all this fun stuff and pipes. And that really should be considered because all of those will be exercised at some point. So just kind of making sure that you're watching them really closely and making sure you're you're operating with the right valuation in mind i think is important do you cap your position size on any specs until they've had some time in the public markets and had to like file sec filings or are you kind of letting them go yeah so the specs i all four of them are definitely in that

young speculative disruptive bucket so they all got the one percent cost basis up front um actually want lgbw got slightly less because i also own arc g which has um some lgb some butterfly exposure so i had to kind of um consider that but but typically go with the one percent and dollar cost average up to two percent like i do with the other um companies in that bucket okay um anything else on so far ryan no i think that answers all my questions okay well we'll hit the wrap-ups then to get things out of here. I know we're all not that experienced. So these questions will be a little bit different. But I guess I'll ask this one first. What's one financial saying that you disagree with? For sure. So I guess maybe not financial. Well, kind of a financial saying of

2020 and 2021 is that stocks or stonks only go up. And I just want to emphasize to I guess the anyone on here who finds any validity in that saying that no stocks do not only go up. Um, and yeah, so just keep that in mind that stocks are roller coasters and have to kind of endure that price of admission is volatility. A lot of people like to say, um, and I, and I do really agree with that. Right. And all SPACs can't go up all the time. They're not just. Yeah. It's crazy that we got to say that, but all right. Last question. Uh,

And I guess you're you're early on in your career. But what is one piece of advice you'd give to anyone else pursuing a career in investing? For sure. And I am very emphasis on early on in the career. So for anyone listening who doesn't want to take advice from me, that's that's totally fair. But I would go with do not borrow conviction. Put in the work, have have that have that three bullet point or five bullet point thesis of why you own the company. make sure that those reasons are intact through quarterly earnings reports and investor presentation, but put in the work to have that conviction. Because when these 30% and 40% pullbacks happen, like with a lot of the companies I own, and it's inevitable that they will happen in the future, the only thing that's going to keep you in those companies and the only thing that's going to motivate you to buy more is your personal conviction, not somebody else

on Twitter who told you to buy it 50% higher, who's saying hold the line or buy the dip, but your own research and your own conviction. Right. That's the financial saying I disagree with is hold the line. That one has become popular in the last two weeks. But that is important to have those points either written down or understanding why you own something, because the price action or whatever does happen can make you psychologically like, I don't know what the word is, but there's got to be some psychological term for that. But if there is that 30% dip or something, and the reason you own it hasn't changed, then you can have confidence in adding more to that company.

For sure. For sure. Well said. Okay. I think that's going to do it. That's all our questions. Thank you, Brad, for coming on the show. Or lastly, where can people find you?

I know on The Motley Fool and stuff like that, but any of your personal stuff? Yeah. Yeah. So the Twitter handle is pretty much where I exist. Stock market nerd sounds how it's spelled and no spaces or dashes or anything. And yeah, thanks for having me on guys. Again, congratulations on the new, the new, I get the new fund that you guys are starting. Exciting stuff. Awesome. All right. Yeah. Thank you for coming on Brad. Thanks, Brad. All right. Welcome back in. Thanks again to Brad for coming on the show. Next up, we have hot water. We know this episode is going a little bit long, so we're trying to speed it up.

you want to go first i only have two so uh i have two as well all right first one is individual restaurants now i think i'm okay then you didn't take mine good and then the next one is something about let's do a little spoiler here oh god i grant something weird all right uh okay go ahead the individual restaurants uh if you're looking at okay say you're watching the super bowl you're an individual restaurant and all you're doing is takeout right now like you how mad would you be If you're seeing these delivery apps, you know, gauge your eyes out for 30% fees and then they end up spending $5 million on a Super Bowl commercial telling the world to support local restaurants by using their app. I mean, I think that's insanity. Like you saw DoorDash and Uber Eats do it.

I don't know. I mean, I try not to use these delivery apps because unless it's for fast food or something, you know. i have heard though the flip side of it i have heard other like like case uh case studies where it really helped the business um and they can usually pass along a portion of that fee to the customer yeah that's true i don't know and it's easy it's so easy to criticize uber and any of the food delivery places but if it is helping business like if it's increasing volume then maybe the take rate whatever you're getting a smaller slice of a much bigger pie maybe i think i think a lot of i don't know from the stuff i've read i used to be in that camp but i i started to

see a lot of other case studies maybe i need to look at that but if you're doing 10 operating margins at a restaurant and then a delivery fee comes in at 15 i don't know it seems a little weird but if it was so bad for these restaurants why would they let them do no choice that's not true well either side pickup you could do your own i mean a lot of these uh restaurant softwares are allowing for that square rolled it out in like a week after covet so well they got no volume on that okay but i mean there's other ways if it but you're saying that you're getting more sales because of these things right yeah yeah but it's like negative margin well you can pass that price to the consumer potentially i don't know unless i'm using fast food i'd never use i can't use

the delivery apps i mean why not why would you just look if you can have you can either give all the margin to the restaurant or you can give 10 of it to uber eats i'd rather give it to the restaurant yeah i mean i like going to restaurants so i usually just go and sit down if i can so doesn't well just if you're getting if you're getting pickup you know yeah i don't know i just uh i started to hear a lot of other stories about it maybe we're not the ones to talk about it what's your second one okay this is a funny one uh all right so there's this guy and it's probably a viral tweet but i thought it was pretty funny looking at someone starting up like a youtube channel uh so there is i have no idea what form this on it looks like the dark web on this little

thing but he said i just got released from prison for four years robbed a bank but pleaded aggravated assault just getting out what do i do and this guy user 819003901 famous user we all know he said one start a youtube channel two first video you sit in front of a high quality camera looking presentable one half the screen is going to show a video game title of the video real bank robber all caps critiques gta5 bank heist mission this is sounding pretty good right it says four you're going to commentate over the gta5 intro pause every now and then and say back when i hit the bank the cops were on us much quicker do a little commentary before you know it you're at 350,000 subs and growing and all you do is talking to a camera about prison and you make all the more

you make so much more money than the rest of us and apparently this actually happened and there's this video formal jewel thief reviews gta5 jewel heist uh which i thought was funny it has like a million views so i would yeah that's capitalism work right there i think i saw that actually uh i didn't watch the video but i saw a tweet of it it's yeah that's that's funny okay um hot water for me oatly's and hot water uh i think they win uh prize for the most tone deaf commercial ever you don't think it was on purpose dude i guarantee the marketing team came up with something different and the ceo was like no no i'm gonna sing people want to see me sing no i think they know they this happens every year someone makes a bad commercial on purpose so people like

us talk about it this is not this is not peloton this is i think it is only and i know it's a bad i think their valuation probably lost 50 percent oh they're spagging horrible commercial they're spagging at 10 billion oh yeah i mean i'll agree the commercial was not worth it because it's a commodity product like i'm not buying their oat milk because of that but i'm just telling you the theory behind it i don't think they did not make that commercial in good faith that it was like quality they made it they wanted to make it bad on purpose i i think i i think the marketing team was probably at odds with this uh i don't think they wanted to run this commercial and it wasn't up to them maybe maybe there's definitely some you could probably see in the in the inner

or whatever the executive teams were probably where i don't know whose side was on who but there's probably a lot of conflict or debate second uh second hot water for me is par technology the ceo savneet singh who we both think quite highly of actually said in a tweet uh should i start doing my conference calls on clubhouse ah i'm not sure if this is sarcastic and sarcastic but it feels like a red flag also what the hell is clubhouse i hear it every day and i don't know what it is well you can get only yeah you can get on there because it's iphone only but i haven't been i thought it was invite yeah talk to like i think irish investor having some invites you can you can reach out to some people find it brilliant actually because i feel excluded yeah my entire

marketing strategy is fomo it sounds like it but it doesn't sound that fun you just kind of listen to what vcs talk and pontificate i don't know it doesn't sound very fun okay uh but uh what was i gonna say oh a lot of people that are older have been saying that it's just radio on the internet from the thing that mark cuban made uh so we'll see if that actually ends up like that roi roi yes and uh we'll see if they get bought up by for like four billion dollars from a big tech company uh that could be the end goal and then it just gets written down forever and the founders cash out and become a uh sports it was not it was not it was four billion yeah but yeah i was mark mark cuban uh it wasn't just radio on the internet i thought it was like a sports live

stream thing i thought the radio on the internet was silicon valley's make fun of him version no no radio on the internet mark cuban came up with that i'm pretty sure or maybe yeah yeah Broadcast.com Internet radio company Founded as Audionet In September 1995 Bought it by Yahoo

For like 4 billion 5.7 actually Wow Good for him Good Bad for Yahoo Buy sell hold The theme this week

Is companies that Advertise during the Superbowl Pepsi Nintendo Robinhood Well you know us Disclosure

We own Nintendo So I gotta say Buying Nintendo Robinhood will be the sell I think they are worth The zero dollars They're i don't know yeah i'm sorry we've discussed this before and this was even before the whole debacle

and what was the other one pepsi yeah hold pepsi yeah i mean that seems like a permanent business right there okay uh anecdotal evidence for the week i'm moving um i guess when are you when are you moving uh moving date is moving in i don't know probably two weeks two weeks all right well i hope moving sucks i just finished but yeah it does suck but uh i think there is definitely room for someone to replace apartments.com like there should be a better apartments.com sucks rentals site there should be more like a zillow for rentals and i'm sure there is but i did not find a great one and there was nothing that was really helping that much so your experience on apartments.com was not great no i mean it was pretty buggy for me yeah i mean the the interface

was terrible like it was almost like i couldn't use it anymore and also every single price or whatever just said contact for details like yeah what's the point of that no it's not yeah the apartment searching experience is nowhere near as good as the zillow home searching experience yeah for sure i just think that's an area that's ripe for disruption ripe for disruption uh you're you're becoming a vc every day all right what do you have uh okay did you read kathy wood's day in the life article no no nothing really special there but i kind of thought again like there's nothing there's no difference really between someone that has a 10 billion or they're probably on pace for 100 billion dollars in assets under management they're not doing anything different

they're like she's like yeah i go on zoom calls and i we do some research with the team and that's it but right now she's riding high um yeah i mean i don't i've never thought like those ceo day in the life things were gonna be so spectacular people were like like bezos released his it was like i wake up at like seven i have breakfast oh what about mark walberg's is there okay that one okay the only people that have absurd daily schedules have posted them because they know they're absurd yeah they just they're doing it to demonstrate how hard-willed or disciplined they are but in reality it's just a lack of sleep yeah i mean everyone goes through that phase where they look up those motivational videos on youtube and then you like look back a few years and you're

like yeah i mean those weren't really they're kind of dumb yeah yeah but i mean if they help you get motivated i don't know but you know what i mean everyone kind of goes through that you find those videos yeah i don't the people that wake the people that work out before 5 a.m man those are the ones that i don't it makes no difference when you like it doesn't matter when you work out at 8 a.m it doesn't matter just i don't like i don't like waking up to my day knowing that i just have to wake up with struggle yeah well if you want some examples of successful people that don't do that tom brady gets nine hours of sleep and wakes up at like six and doesn't you know he tries to get nine hours of sleep and bezos doesn't set an alarm or that's kind of the story he tells

so i mean you don't that stuff is ridiculous yeah or like i don't know or people that talk about the little sleep stuff you know like oh dude when this thing happened i researched this company all night if you do that that's fine i'm just telling you if i'm getting four hours of sleep a night i'm not operating i want seven to nine at least yeah yeah great all right i think it's gonna do it right uh okay i had one more this is simple moving into my new apartment got a tv had to be roku i think the business is gonna continue doing fine um but that's just me that's i swear every person's like this roku stuff such bullshit and then they're like they get a roku they're like this could really be something yeah well i saw that i mean when i used to come over

to your old apartment i was like oh this thing is this thing is better for sure now the stock on the other hand yeah yeah that stuff might be priced in now but yeah okay 36 times sales okay well that's gonna do it thank you guys for listening uh thank you to brad freeman oh yeah thank you brad for coming on the show and we run our capital now so anything we say might be uh holding you want to be yeah we but we're not financial advisors don't take what we say as advice anyone that's on the show might have or lps might have positions uh in the companies discussed thank you guys for listening we'll see you next time