Chit Chat Stocks - FICO and Nike Tumble; Burry Accelerates AI Short Bet; Compounders Out of Favor $NKE $FICO $DPZ

Episode Date: October 2, 2026

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. This week we discussed: (00:00) Introduction (01:06) Meta Poaches MongoDB CEO Ahead of Investor Day (04:18) Nike Earnings & Strategy Review (12:54) AI Agent Landscape & Funding Round Updates (17:47) Muse, Agent Commerce, & Online Platform Moats (29:06) "Compounders" Trading at Multi-Year Valuation Lows (39:09) FICO's 72% Drawdown & Mortgage Scoring Overhaul (51:04) Fixed Income: 30-Year TIPS at 3.25% Real Yield (53:40) AI Bubble Watch: Burry's Puts & GPU Leverage (58:19) Live Chat Q&A: Crypto Threats to Remitly & Interest Rates on Adyen ***************************************************** Email us with any questions: [e-mail]  Subscribe to our newsletter and join our FREE chat community: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Trade election, climate, and economic outcomes with IBCR prediction markets right alongside your stocks and options. Earn interest on your position and receive $1 per contract if you're right. Learn more at IBCR.com slash predictions. Welcome to Chit Chat Stocks. I'm one of your host, Ryan Henderson, and I'm joined, as always, by the one and only Brett Schaefer. This is the podcast that helps you find your next great investment, and we are doing our weekly investing power hour episode where we talk, all things financial markets. And there have been plenty of news over the last couple weeks. I should mention that I was out last week. So, and apparently I missed the, the age of agentic,

the agent apocalypse, as my portfolio indicated to me this week. But we've got a whole bunch to discuss. We're going to be talking booking holdings and Airbnb. We're going to be talking some compounders. I'm putting compounders in air quotes because that's what they used to be called at record low valuations. We've got Nike earnings, Accenture earnings, fundraising news for the AI world and a massive FICO drawdown. Brett, where do you want to kick things off today? Yeah, Ryan, did you hear the age of agentic AI? It came and I think now it went. I guess Muse took over everything and now it didn't. I would

like to talk about a lot of things this week. Did you see maybe you didn't, neither of us put it in to the show notes that as potential ideas I had listed here, but MongoDB's CEO, did you see what happened? You might have been on vacation.

I saw a headline. Okay, so they had well, okay, Meta stole him to head up a new enterprise AI division, which meta, enterprise, and we'll see, they never been able to do anything in that nature. But they hired a new guy from MongoDB, but it was one or two days before the investor day.

So they didn't have any, MongoDB didn't have any leadership for the investor day. I don't know how that went, if they rescheduled or not, but if you're the CFO or the CLO, you're probably in a tough spot, like, yeah, guys, I don't. I know every big investor just flew in to New York City. I got to get out of here, though. Sucks Colin. That's insane. Two days before the investment.

I tell the next week. He must have, like, he must not have liked the company. I mean, honestly, it's that if you enjoy your company, you leave after the investor day. I guess that's kind of what we were just talking about Rollins earlier. He left to the CFO. departed two weeks after Investor Day. You don't leave them hanging. That's kind of insane.

But meta poaching talent, that's nothing new. Yeah, but the most important thing, Ryan, is that it looks like your Wi-Fi is going well. We've had issues, but it looks like it's back. It's a very heroic Ethernet cable. For everyone's listening. It's spire like around the house. I have a 100-foot Ethernet. cable running through my house from the internet port to my computer.

And so far, it seems to be working. My significant other is not too ecstatic about the long cable. Just an hour. You can take it. You have to put it in, take it out. You know, it's just for an hour. Hopefully you guys aren't hosting dinner during the power hour. Okay.

Before we get started, I have a PSA for any listeners. I know I actually checked. This is some of our largest countries. of listeners, although most people are from the United States. Any listeners that will be in either Munich or Prague or on the Canary Islands, if you live there, reach out. I think I'll put my email in the show notes or the podcast email.

I check that one every day. So send an email there if you want to meet up. Who knows, maybe we'll grab a beer or something. But topics. Should we start with AI or save that? Maybe Nike? I mean, what are they? Keep dying?

I saw the stock was down after hours. You pick, Ryan. Whatever you want. Let's start with Nike. I don't think this will take too long. I'm going to read you the first quote from the conference calling. Well, you can already read my notes here, but you guess whether or not the stock was up or down after hours. This is the first quote on, not the conference call, the press release.

So this is for everyone listening, usually where you brag about your quarter. The sport offense is driving. measurable progress across our performance business, and we introduced pace to help us accelerate and scale that momentum across Mikey. Lovely. That's like, that reminds me of when Lulu Lemon was talking about like, it was either three plus two, three times two. We had three pillars, two strategies, and it's going to lead to momentum.

It's like, yeah, thanks. Your numbers are terrible. Yeah. So I think generally when the first quote, from a, a press release does not have any sort of measurable result. It's you, that means the quarter was not good. It's more or less saying,

hey, look, we came up with a new acronym for business strategy, our sport offense. Like, how long do you, how many meetings do you think they have to come up with a new acronym or a new strategy name? It's,

it's gross. Yeah, a lot of bad marketers. Yeah, they got a lot of nonsense people, I think, just hanging around, big bureaucracy, not really much of a vision. Like, what exactly is going on at this company? I don't know. Why am I going to buy their shoes over there? Tell you, what's not happening is growth.

Here's the revenue breakdown by region. Actually, North America revenue grew 2%. So not, you know. Okay. That is a step in the right direction, in all honesty. Europe, Middle East and Africa. revenue declined by 5%. Greater China

declined by 22%. This is, wow, really what's driving the results. The since so Q, what is this, their Q1, whatever, since this quarter five years ago,

revenue in China has been almost cut in half. It's, I think, down around 40%. So I don't know what exactly went wrong for them in China, but it's just they were beneficiaries

of the Chinese boom and having a ton of strong revenue growth there for I think almost maybe more than a decade and now they're bearing the downside of it. I can help actually with what happened there. So I've been researching this.

It's actually funny enough. Crocs as a stock, I'm doing that for the Friday newsletter that'll be out tomorrow when most people are listening to this. It will be out for readers of the emerging most newsletter. I was looking at Nike as a comparison because Crox is growing pretty strongly in China at the moment. And what a lot of analysts were saying, what went wrong with Nike is that they just took their global marketing, you know, North American sports focused and it has plastered everywhere in the

world. And that can work in some places like maybe Latin America, Europe. But in China, it started not to work. and Crocs essentially where they've had success, and I think Lou Lemon may be as well, though I can't speak definitively on them, as Crocs hired some local marketers, where with the Crox shoe, it became more acceptable,

and they had different styles, like the platforms. I'm not going to pretend to know what the Chinese style is, but apparently the taller shoe, the woman wanted to look taller, things of that nature. They had a local stylist, a local marketer that basically took the brand in its own direction, from for that country because it's an entirely different culture than the united states Nike they failed to do that as the chinese consumer uh was you know there are those those

those local brands that have started to take share and another thing i actually heard in a podcast listening to today was Nike is not as valuable for athletes anymore you can kind of pick and choose who makes the best offer we saw the well maybe Ryan can tell me if he's not the best top 10 top five soccer player in the world in Boppe always the best name love pronouncing that he switched randomly to on which was a bit of a surprise so I think there's just more competition there and they don't need Nike to turn you to Michael Jordan you're already kind of having that presence with the internet social media things like that yeah the results look just pretty rough across the board

direct revenues dropped 8%. Part of that was expected they've been making more of a push towards valuing their wholesale partners again. I think for those that don't remember, I think maybe five to 10 years ago, Nike made a very intentional push to say,

we're going to sell primarily online, not primarily, but prioritize our online channel. going to wrap. Yeah. Dick's sporting goods. And yeah, I guess the the shelf space went to Hoka and on.

Yeah. And now they're trying to invest in growing the wholesale channels again, and revenue from wholesale dropped 1%. You're over here off of a pretty low base. So here's the guidance. Revenues are expected to decline high single digits in fiscal 2027. Adjusted diluted earnings per share is expected. expected to be in the range of $1.15 to $1.35 compared to $2.10 in 2026, I'll add,

which excludes approximately 15 cents of restructuring expenses related to PACE. So, as per share expected to get cut in half and Pace is their new business strategy. Oh, that's what they're just using for cost cuts. Gotcha. I love it. I love the corporate speak. Well, what's weird is this stock is it? You are being fired because of Pace.

We're moving with pace And you're not going to be a part of it I'm worried about Oregon's NIL budget At this point Phil Knight Might go bankrupt He might be a homeless man on the streets of Eugene He'll be fine The football team may struggle

Maybe that is If you don't want to play Nike directly You can get a derivative bet Through sports betting on Oregon's football team Yeah I don't think that's going to affect it But look, okay, the PE is 17, at least before today's drop, or the after hours drop. So maybe it's 16 after hours. That's not that cheap still.

Forward P. 35. Not often you see that big of a... Forward P. 35? Well, their earnings per share is expected to basically get cut in half if I'm reading these numbers correctly. Let's say normalized margins. Maybe you'd assume margins recover so we can use maybe price to sales. let's go back all the way to 2015. It is lowest by far in their history,

price to sales of one. So if you think this is a 20 times PE business, you are assuming 5% net income margin. That's a very, very low expectations. Who knows? Maybe this is the, what do they say? The, why can't I think of that? You know, when you throw all the bad news into one quarter?

What is that? I don't know with a term, whatever, like garbage stuff in or something. Yeah, yeah, you put everything bad, you reset. It could be true, but I still, I still don't like the business. Well, they've been doing, they've been doing that for like 12 quarters in a row. The, I don't want to get anywhere near it. I really, for me, this is one of those businesses that, no price. There's no price for I'd be interested.

Really? A 0.2 times book. Honestly, I just don't want to be involved with this. And I don't want a deep value on apparel. I don't think it's ever worked out well. And it's not going to get to a price where it's like, no one's looking at it. Like, it just won't. Yeah.

Okay. I pass. Let's go next topic. FICO? What about some? Why don't we do AI first? People want us to talk about AI agents. There's a lot of questions about this.

I think next week we're going to be a full episode on basically buying opportunities or selling opportunities things we're concerned about with the potential AI agents. I know it's very, very timely. But there as, and it's been really two weeks since Ryan is on vacation of news in the AI world. I've opened AI first, which things, I don't think the reporting puts it this way, but I think is getting slightly dead. There was, and we'll put the conspiracy hat on here. They delayed the release of GPT6.1 Astra, which first, who names these? Why? They got to get the coders not name these anymore.

Get a marketing team. Maybe take the Nike marketing team. They're not doing too well. These are geared towards coders. Yeah, but okay. You have to market sometimes to a consumer. like, hey, the consumer market is going to be much larger. I mean, look at Google's profit pool.

There is a massive opportunity here, and you have to think of some better name, because you look at the tiles now on, okay, you can go on a chat, GPT, like, all right, what one am I going to use? Like, the average person has no clue. I guess it's not the end of the world, but. I don't think they care for the moment. Okay, then you're spending all this money on these new models, and no one cares. like what's the point would you rather have it

coder named or would you rather have them scheduling strategy meetings like Nike to come up with a just call a chat GPT call it chat GPT they don't call it Google 2.0 they never called it Google 2.7 our latest step day

no Pluto well okay so Gemini they stopped they stopped they delayed the release because of security concerns. And I think that's conspiracy hat. They're not actually concerned about security.

If they were, they would stop releasing this. Okay. Another thing, they are targeting $30 billion in new funding at a $1.4 trillion valuation. I will remind listeners that less than 12 months ago, they raised over $100 billion, and according to the FT, they are going to have cumulatively, and this is what they're telling investors, mind you, so they probably are fudging it a little bit, cumulative negative free cash flow of $280 billion through 2030.

That's, okay, we're almost done with 2026. One, two, three, four years, four and a half years. Are we, okay? I think. Okay, keep going. I'll save my comments. Okay, Gemini. They released Gemini 4 Argon.

Again, the name is not sure. You were just crediting Google. Well, I'm saying Google, Google, Google, Google. It's Google. It's been Google. They don't call it Google 2.8. I feel like these are all those like, astrology sign names

are my name um yeah Astra argon maybe they're competing with each other yeah look they had a blog post that I'm sure the enterprise people and the coders care about but the consumers don't

I am deeply concerned about Gemini's product it doesn't seem to work very well it bugs out of me all the time I'm probably going to cancel once I have this free uh trial over with our Google Drive business or a subscription Anthropic here.

I guess the AS1 should be imminent this month. I will mention to listeners. The Space X S1 came out, I think, or there was some news around it while I was on vacation, maybe. So if I go on vacation again, which is going to happen next, the end of next week and the week after, I would expect it to happen then because then, you know, it keeps me from covering it. But Anthropic, apparently, according to the third-party sources, kind of like the sensor towers of of them. Their ARR, you know, went from like $10 billion at the start of the year to $60 billion in June. It's only really around $70 billion now. So the growth, year over year obviously still is fantastic.

But on kind of that month over month, it slowed down significantly. And then Ryan, we had to talk about Muse, which, which, which did you get any of this new cycle or were you out here, Hawaiian Reservoir? rate. You saw a little bit? Yeah, yeah, I saw it. Is it going to disrupt everything? Uh, we'll see. Look, there's a comment here in the chat. It says every time I see a chat GPT commercial while watching an NFL, an NFL game, I wonder how they are paying for it. I went on a rant and people were like, what on earth are you talking about? I have you watched the NFL games? They're piping them in every break. Yeah, the, uh, I did a little sanity check and mentioned Muse in passing. I already told you this, Brett, but I'll tell it for the listeners. Mews in passing to normal people, like people that aren't just in this echo chamber of investing

AI. And they look to me like, what on earth is muse? What are you talking about? Now, I get it. Usually, you know, tech forward people are early adopters, but it was kind of nice to remember that, like, no, my My fiance is not booking her DoorDash order through Muse. Like, they're not buying their groceries through Muse. They're not booking hotels through these random AI agents yet. I'll put the yet there. I haven't spent any time on Twitter lately, but I did see someone link to Bucco Capital, which is a very good meme account, anonymous account, I think works in the tech industry.

and he said two trillion dollars in capax to get some restaurant reservations. And I tried it. It actually works for restaurant reservations, but that's not very difficult. Okay. Let's just, I think, let's have the agent debate now. For starters, if the idea is that this is all about commerce, the biggest spenders, for the most part, are women. like if we're talking about shopping, we're talking about,

you know, buying food, reserving restaurants, they enjoy the process of looking for stuff. Like, they don't want you to, they don't want Mews to pick it out for them. At least that's my experience.

That's what I've seen. The other part is, like, it, okay, maybe it worked for the restaurant reservation, but booking holdings, like,

I don't think it really changed. the buying pattern at all. Like, people were already cross-referencing prices for high enough ticket values. Like, you're telling me you just book, you're going to book a hotel blindly with your agent and not look at the photos, not, you know, check the reviews, anything like that and just blindly trusted. It seems very unlikely. And the only reason I'm going on this rant is it affected the stock prices.

booking Airbnb, they both, I think, dropped around 10% or more on this muse news. So what are your thoughts? World events unfold in real time and now you can trade them. With IBKR prediction markets, you can trade election, climate, and economic outcomes alongside stocks, options, and bonds all in one integrated platform. These are simple yes or no contracts priced to reflect the market's view of probability. If your prediction is right, you'll receive. $1 per contract and earn interest on your position while you're invested.

IBKR prediction markets turn market expectations into actionable trades. Prediction contracts are not suitable for all investors. Learn more at IBKR.com slash predictions. Okay. When I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my out of office has a first.

Forever Center. An IG Private Wealth advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivatewealth.com. Well, I think they're useful, but it's not going to kill all these businesses. I listened to a good podcast with the founder of instinct on Invest Like the Best, and he said they're already at, again, it's ARR, so they're probably just taking the last

week and multiplying it by 52, but they're already at a billion dollars in payment volume, which is pretty impressive. Again, divide that by 52 or maybe even 365 for the last day. But he said they're growing users 10% every day. So there is uses here, but it's not going to kill every platform because it's not going to say, like, just disintermediate the entire internet and say, all right, this business and every person has an AI agent and they're just going to converse with the technology. other and build contracts like you're going to go on Airbnb still and find it like i tested out with

zillow you know hey i have 10 criteria for uh rentals so i help me find some good option because zillow yeah it's hard it's a lot of browsing it worked okay and yeah i'm sure it'll get better but still using zillow and when i see people talk about a disrupting doradesh and uber those things are not browsable. It's kind of like, all right, I'm there, I'm doing my thing. Maybe Dordash. She'd browse a little bit. But, like, people said the internet was going to destroy pricing power, but people evolve or businesses, excuse me, evolve. And the ones with competitive advantages went out. I think this is going to be either narrative-wise or truly a nice moat test. We'll see how good these AI agents can be. There's already some people talking about

how they did things they didn't want it to do, which would be unfortunate that, you know, it's got to work pretty much 100% of the time are people going to get nervous. It's going to test the competitive advantages. For example, Amazon has their modes that we've talked about plenty of times. People know about the delivery modes,

the speed, the wide selection, all that. Airbnb, they have the supply, which should be their differentiator. Unique supply. Yes, thank you. other businesses may have their old other forms of modes now yeah maybe there is it changes marketing angles maybe you have to kind of adapt a little bit of this takes over a lot of the buying process but i still think the platforms will be fine like for example the remittance providers that we talk about

a lot seem to sell off a little bit on here and we talked it was either with you or aria again thanks for ari for coming on last week i think listeners enjoyed it you know get a little I guess we're kind of aging out of the young investors. You can give us a fresh young 20s look at the market. I think so the remittance providers have sold off a little bit. I think part of it was because of this, both wise and remitly. Part of it is because there's some product launches at new holdings or new bank, and it's kind of hard to tell exactly what it was,

but I think some of it was AI agent sell off on consumer stuff. I use the AI agents and it always points to, or I tested it for remins providers and it always points to either Wise or Remitly. So I actually think if you had the better product, which Wise and Remitly do, these AI agents, I would be bullish. Like Airbnb, I would be bullish because they have a better product. And if people start adopting it, it'll start pointing to them. I'm going to read this. Drew Cohen posted this this week and I thought it was spot on. So I'm just going to read this.

He said, I wanted to try what happened when I used Muse to book a stay in Florence, Italy. First, it returned five options. The links to all five were booking.com listings. It did not prompt me to price check or go direct. I did prompt it to check if it was cheaper going direct. From the time I asked it to check to when it answered me, 14 minutes had passed. Sure, I could do other things in the meantime. but if I was really in the mood to search travel,

I would have realistically just gone to different sites or did the check myself. The conclusion was two out of the five listings were cheaper to go direct with the other three cheaper on booking.com. Although one of those was only cheaper because it was non-refundable and the refundable rate was the same as booking.

The one that was cheaper was because it had a special 15% discount if you stayed longer than five nights. So really, more like one was cheaper, one was wash, and three were more expensive than going. but by going direct than going on booking. The interesting thing is people are acting like the ability to price compare and shop rates is new with Mews.

Yes, I get it makes it more automatic, but a lot of travelers checked the direct rate before booking anyways. I'll stop there. He keeps going. I think it's good. But who I don't think realistically people are shopping like this, especially for some of these higher ticket. things like a stay I think the travel will be fine one thing though is apparel

we've been haters on all apparel stuff I think it will be in a tougher spot because you could maybe better price compare but there's already been a lot of price comparisons so I know yeah I don't think it will disrupt them that much

because look for starters you me rational consumers don't drive the top line for these for apparel businesses right like we're not the big spender okay maybe like targeted towards men maybe but like women are the big spenders in the apparel category they enjoy the process of shopping they don't want the agent to do it for them yeah and the browsing is part of the fun yeah and price isn't the only is probably low on the like relevant factors for them?

Yeah, I mean, you could say, okay, I have a Lula Lemon, blah, blah, blah, something, and you could ask your agent, hey, is there something of equivalent quality I can get out there? You know, this product's kind of expensive. Is there any other options? It makes it easier to do that. Come on, you know, that's true. Yeah, but the internet already did that. Yeah, but it makes it much easier.

I've tested this. It makes it a lot easier. It helped me with my research on Crocs. Yeah. I just I think you got to get that. Maybe there's a way to time stamp this and see if there's any meaningful change in what would be the way to measure the progress here. I don't want to do it from instinct or muse numbers that come out from them because they're going to be selective about what they actually say.

I would be curious what the retailers say. Like are they seeing meaningful volumes from agent commerce? Yeah. We have a comment here that says, am I right in thinking these service providers and retailers can just outright refuse AI agent access? This is true. Amazon did that.

Yeah, I want to save that for the full. We're going to do a whole episode on winners and losers, and we got all this stuff to talk about today. Let's see. Yeah, we have something that's a different topic. Someone wants to talk about Adion. I think Adion is actually down because of agents. I don't see any other reason why.

people think that's going to disintermediate the payment process. And yeah, someone says if my girlfriend points out a booking blunder, I'm going to blame the AI. I don't think that's going to work out well, but that's good job. Best a luck, my friend. Yeah, not going to work out well. I was going to say, I hope Drew is taking a solo trip. I saw someone tweet, I booked a flight with Muse. I think it was Muse.

Maybe it was a different agent app. And it gave me a random middle name, and I couldn't, get on the flight. Really? Yeah. That's crazy. That's crazy. Let's shift gears.

I feel like that's going to be the new conversation probably for the next year. Same way the SaaSpocalypse was talked about for so long. Yeah, there could be some buying opportunities. Yeah. Sorry, go ahead. No, let's shift to what do you think about this compounders list? Sure. Sure.

We just did a full episode on Rollins. It's the number one on the list here. That'll be out next week. That was a fun one. Don't get too bored by pest control. It's a good business. It is. Really is.

So I'll preface this by saying it felt like not even post-COVID. Prior to COVID, I'd say pretty much up until maybe 2023 when we had that big dip. There were a subset of companies that were deemed like untouchable compound. very like no matter what happens they're going to grow above 10% and they put most of them probably still are growing above 10% or they're going to generate great returns on capital super wide moat businesses they and and the big thing was those businesses those businesses deserve to trade at 30 or 40 times earnings or higher a ton of them have seen rapid multiple compression so I just compiled a list of all the ones that I thought were quote unquote compounders

that are now trading at their lowest multiple in a decade or in some cases ever. First one, Rollins. I'm using EV to EBIT for basically all these earnings multiples, but earnings multiple 21 times. Pool Corporation, I don't know if you remember this, largest supplier of pool materials and equipment and chemicals, 13 times earnings. Otis Worldwide. which makes and services elevators.

It's the largest manufacturer of like the elevators, but also escalators and those walkways that you see in like airports. Oh, yeah, I love those. It's always bringing down, though. I guess that's service revenue. Hey, that's exactly. That's a service contract right there. 15 times earnings for Otis Worldwide.

Booking holdings, just talked about them, 14 times earnings. Copart. 13 times. Striker, which I think is like the med tech software giant, if I'm not mistaken,

I don't know the business super well. Yeah, some listener was, uh, I don't know, it wasn't, it's not the Alice

that's SDAVita. Some listener in the substack chat was talking about it this week with me. Yeah, seems interesting. 15 times, non-discretionary. Pretty good.

I mean, these are, yeah, I don't want to, I don't want to speak too much about strike. because I don't really know the business super well. But I get the sense that they're the kind of business that has customers that have no intention of switching. Like these systems have been with them for 20 plus years and they're just going to stick around.

Number seven, Domino's Pizza, sub 15 times earnings. Is our AI agents going to destroy pizza? Well, we're going to price compare. Papa Johns is given my. agent a really sweet deal. I think you could sweeten your offer, Domino's. If you price compare, Domino's will win. What's interesting, I always like Domino's a little bit more than a McDonald's or a Starbucks

because it seems to be the number one pizza, like cheap pizza global brand that's going to go out there. And it has half of the store count as a Starbucks or a Subway or a McDonald's. And if you believe they can get that store count to the same level as McDonald's, which I think you probably can, you go anywhere in the world are a lot of places. If you're going to have the American brands, you usually have McDonald's, Starbucks, and Domino's for the most part.

They have less cost worries than other restaurants because it's bread, which I guess wheat prices are going up, but bread, tomatoes, cheese, and a few other things. But you don't have that beef input cost that can be quite the headwind for a lot of people

or a lot of restaurants out there. And they buy back a lot of stock, probably some pricing power, because it's so cheap already, you can get a what a pizza for like 10 bucks, right? So I wouldn't be too concerned about the price war that's impacting a lot of other quick service restaurants 15 times. Yeah, you know, sometimes they go through bad periods. I'm guessing this does well over the next decade. Yeah, I mean, if we're talking purely, like I don't think people only buy pizza based on whichever is the lowest cost. or you might be unsatisfied with your pizzas. The Silas in the comment says,

agentic, cheesy garlic bread. Yeah, it's possible. That's true. That's true. I made a meme for the Crox Post, and there was like, you can, you know, you put your little caption in. They have that free thing you can do online.

And they have an AI thing that can do it for you. It's enough already. I don't need AI for my, memes. That's my own little joke. I came up with it. Yeah. The, uh, I think the more realistic risk for Domino's is probably GLP ones, but the, I assume that's why it trades at its cheapest earnings multiple in a decade. That's, yeah, I forgot about that for sure. Co-star group, hard to peg really a earnings multiple on them because they've eviscerated their earnings by plowing into homes.com, but you could back into like forward EV to EBIT,

non-gap of 28 times or something. If you took normalized earnings, it's trading at its lowest, or normalized margins, it's trading at its lowest multiple ever. The question is whether or not they can get back to it remains to be seen, I think. But I'll keep moving here. Zouettis. I always I always think I'm saying that wrong, but largest pet and

it's like vet supplier? Yeah, the largest pharmaceutical company for animals. It's like livestock and what do they call it? Yeah. I would say that the pet market topped out in 2022

there's kind of a pandemic bullwip maybe we're normalizing. I can't remember the term they call it, but like household pets. That's, yeah. Think about the chewy. There were a lot of pet. Remember this one,

Trupanion. Yes. That was a terrible. They were like lemonade, had no underwriting profits. The, yeah, I mean, I imagine the pharmaceuticals business being the best employer.

The vet is got to be better. That's a Michael Birdie pick, too. He's been all talking nonstop. He's been on it? Guess what he is loading up today, caused the stock to go 3-4% watchless stock for me. Sprout's Farmer's Market. He's getting on the train.

I bought it's 63. The cheap universe too now. Okay, lastly here, Intuit, which I think Intuit can honestly be in a I like it. Decent spot here. Yeah, I think QuickBooks is going to be very resilient through

any AI world. And my gut tells me, me that turbo tax will not be as affected by AI as people think. I think it's a very sticky service.

They still have a lot of mind share when people start their sort of tax journey. So I think they're in a good spot. And then the last two here, Fico and Autodesk. Fico's about 15 times. Autodesk 21 times.

And we've talked about Autodesk many times over the years. They launched their own agents if you saw it probably didn't see this press release across what are they, their three product categories. They do that same thing that Nike does where they keep naming new segments over and over. I think it's like fusion flow forma,

but they have agents now for each of them that can communicate with each other and then something. But anyway, like not autonomous design, but iterative design is a huge market opportunity for them, as well as testing things of that nature. But it has to be trained in clean data, So it's not going to... You can't grow absurdly fast

and just kind of move fast and break things mode because, well, if you move fast and break things, we can't have a skyscraper collapsing. But Fico, interesting. I had a whole segment on them, Ryan. They are apparently going to zero. It's unownable. Have you followed this story?

I've just been following the stock dropping until today I did a little light research. Uh, slightly, but it's a, it's actually a very hard story to follow. Like, it's a very convoluted industry. Yeah, there's a lot of names that you have to know, a lot of, a lot of acronyms. Okay. I have this as a same, and maybe we can move on to them now, unless you have a stock that you like the most out of these 12. Top three. Name your three. Top three. I'm going to go copart. copart it's cheap

auto desk and maybe Rollins Rollins yeah I like Dominoes probably say CoPart 2

ooh into it gotta look at the once you get close to 10 times it's a pretty cheap earnings multiple okay Fico Stagg's collapsing it's down 72%

in a 72% drawdown P.E. is down to 19, Ryan, you mentioned the FICO Evita EBIT is 15 times. I guess I'd ask the listeners, are you FICOed out? Like, there's a lot of research out there on them, or would you like an episode or research report on FICO? Let us know, say A or nay. But the housing authorities in the United States, which I think we should mention will probably change with the new president in 2008. Bill Pulte.

I think the Sion of Pulte group. Is Sion the right word? The son, the son of Pulte from the, what are they, a home builder. He's a bit strange. Suss. Yeah, that's a good word. But anyway, in the United States, the housing authorities are now officially allowing more than one score from, or sorry, allowing one score to underwrite, like, the credit score for mortgage applications.

It used to be basically you had to use FICO and others. There's multi-scoring and things of this nature. I don't know the exact rules of any experts. There's the tri-score, right? Try score, yeah. See, there's all these different things. But now you can do one score, and you can go from a competitor like Vantage score,

and there's a price war beginning to unfold where they are selling their credit rating, the Vantage score at $1 or lower in FICO prices at like, $5. But we're going to find out if FICO has a moat or if their scores are better, if they perform better, because if you look at the actual price, if FICO sells at $5, if you're buying a home and Ryan, you just figured this out, your closing cost can be 10K.

So it's pretty insignificant. And the fact that they're kind of spearheading this as a way to lower or improve affordability for homeowners, like Ryan, if someone said, well, good news, we only had to pull the vantage score for your mortgage. It would mean nothing to you. The regulatory capture note mention here is a finicky moat. And apparently what has a lot of people worried is that Rocket Mortgage is switching to vantage score as their standard pushing that cheaper model trying to push out FICO.

I guess this is a big TBD. We're going to see if the ones with FICO perform better or not. Okay. When I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my out of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business,

your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivatewealth.com. New from Nespresso. Blend wellness into your coffee routine with a coffee plant. plus range, infused with functional benefits. Choose the coffee you love with added B vitamins, like coffee plus B12 to help support immune function, and coffee plus B6 to keep your day moving.

Or go with the flow and choose ginseng delight. Our new double espresso with ginseng extract. Whatever lies ahead, don't change your morning. Let your morning change you. Discover coffee plus on espresso.com. Yeah, a couple of thoughts from me here. So for starters, mortgage underwriting, I assume, is still largely dominated by like regional originators, maybe national lending companies. But there isn't any one like rocket mortgage hasn't, you know, they don't have 50% market share or anything like that.

A lot of companies. Yeah. It's very, yeah, very competitive. the the I think I paid I want to say like $300

for total credit score costs on my home line application FICO was FICO yeah

you don't see the FICO name like so I think it was someone else using FICO whatever

but they do three score polls um they do them for multiple lenders or for all the borrowers, any co-signers, and ultimately it came out to like $300. So I think sometimes people say like, oh, if I go score is only $10, whatever, it doesn't, it does get higher than that.

But when I think about my loan, if in theory the vantage score was less comprehensive, and again, I don't know which one is. more accurate or is a better indicator of true credit quality. If the FICO score is more accurate, I will gladly take the lower rate from that because it's

going to save me way more in the long run. And I think the lender would gladly take the FICO score as well because they have, you know, they're saving more as well. It comes down to the lender. It comes down to the lender because you're going to take what they give you. I would be curious. If the loan

bucket of FICO is, loans performs better than advantage score one just slightly there's value there and I think on the credit score poll like okay if fico goes up by five bucks to ten dollars your payment would have been three hundred five dollars you know what I'm saying yeah it's still a drop I mean it's a drop in the bucket relative to all the costs associated with transaction on a home the I this should in theory lower costs for borrowers not meaningfully like okay maybe if i if they if the lender choose chose to only go with one score maybe i would have paid technically lowers cost yeah yes a one basis point but it's not like there's no guarantee that the lender is going to stick with one score

like the lender may continue to continue to use all three or whatever and so ultimately you're still paying the same price, I'd be surprised if anything meaningfully changed. This is like the whole, the home buying process. It was like when the, what was the big real estate, the realtor deal, like the lawsuit that happened where people don't know. Oh, the NAR? It hasn't meaningfully changed the real estate business, unless I'm wrong. I think realtors are still doing fine.

They're probably still picking up very similar volumes. If you strip out the housing cycle, I think they're still probably doing just fine. Yeah, the rates, sorry, the commissions, it's supposed to be free floating now, but they haven't come down that much. I haven't looked at the data recently, but yes, it didn't totally collapse overnight. So there's probably some overreaction here. I kind of Everyone hates FICO I kind of like it here

I think it does fine It's funny You can have a bad outcome The regulators could literally just say We hate FICO And we could put They could push them out But now it's just more competitive

You don't have a regulatory capture But it doesn't mean that there is All sorts of competitors That are going to pop up I think FICO had more As its competitive advantages than just regulatory capture. But, you know, the mode is weakened a little bit.

Yeah, I'd be curious to hear like a lender's perspective. Are they strip out rocket mortgage? Are the standard regional mortgage underwriters still, like, sticking to FICO because they trust the FICO brand the most? They trust the score the most. the other part that no one seems to be discussing here is that FICO could sort of in theory be it's in like a trough right now with housing. Oh, Ryan, people are talking about this.

Maybe FICO people are talking about this. I feel like I've, okay, I feel like I've only heard people talking about the regulatory side and pricing power and all that. I guess it's gotten forgotten the last year or so because it's been so bad for like three years. Yeah, it feels like it's gone to nowhere. Never going to bounce back. But with rates where they're at now, volume, is that the right word,

homes turning over. Yeah, volume, yeah. Home transactions is so low that if things do pick up, if rates go down or whatever, somehow home transactions pick back up again, you could get serious, consist, like, I think there's massive upside with FICO. Mm-hmm.

It has been kind of funny to watch people as FICO's multiple has collapsed. It's like, holy smokes, this is buying opportunity. Oh my gosh, it's 30 times earnings. It's now 20 times earnings. 13 times earnings, I don't trust it anymore. The regulatory mode is gone. You could look out three years from now. They're not going to have the target on the back from whoever the new administrative lead is, I'm guessing.

and they'll be able to raise prices again and maybe the housing market will pick up. Who knows? Who knows? Okay. Let's check those bybacks, Brett. What? Let's check those bybacks.

Well, I don't think they've done well when they were at like 80 times earnings, but, yeah, can they just promise to raise prices by 3% a year for infinity for as long as the U.S. is a country? Here is the quarterly buybacks. Wow. They accelerated recently.

Yeah. Yeah. Look at that. Quarterly buybacks for those listening, basically it's every quarter for the last decade. It's been somewhere between 100 million and 500 million in buybacks. Last quarter,

they spent 2.3 billion on buybacks. Levering up to do it, I'll add, but. We comment here that says they have a lot of debt. FICO's management is that ham sandwich much Buffett talked about. Ron, you should mention who was that platform that you were using. We've had a lot of people signing up with our link.

Yeah, yeah, the platform you work for. We've got a lot of people sign up recently. I don't know why. But thank you. Brett, probably because it's a wonderful platform to conduct all your stock research needs. That is fiscal.a.ai slash chit-chat if you're looking for 15% off. Yeah, it is. it's uh i'll give a little tease here as well we've got a new feature coming for i don't know if you're

going to like this or not but politician trades it's uh hey you'll be able to track all politician trades we can do on the podcast it's a very listenable keyword if i'm going off the motley fool and it's uh i got a peek on the back end of this like these filings are disgusting They are scanned PDFs from these whatever politician assistants. And I swear sometimes they leave creases in so it's like unreadable on purpose. Just to avoid it. Can you guess? Other than engineers at fiscal can't solve.

Those are some top tier. Can you guess what, uh, what politician has the most transactions? Maybe the president. I read it was a thousand. Um, but maybe someone's beat him. Roe Cana. I'm going to send that last name wrong. 42,000 transactions.

Oh my God. Wild. It's just day trading. Some people will become addicts. Now that listeners is why IBKR are a sponsor and Robin Hood are good businesses. Okay. We have 10 minutes, get a couple other topics. Here's one.

Bob Elliott is a substack post. and he has a chart. Maybe we can share it. It's 2036, and you are waxing poetic to some junior clients that there was a time you could lock in 3.25% real returns for 30 years, except, of course, you couldn't bring yourself to do it because you were too greedy chasing stocks at all-time highs. The 30-year tips yield, Ryan.

I know this is very, very sexy stuff. Is that 3.25% meaning on top of, of inflation, you can lock in for 30 years. If I was 50-something years old, not 20-something, about to turn 30, I would be very interested at this as a part of my emergency fund and savings account. Maybe not emergency fund, excuse me. The fixed income you have as you get older, this, look, you can, like, that's much better than you're going to get any savings account.

Because they can just change that on the whim. You are locking in at 3.25% above any inflation. I kind of like it. Let me ask you this, Brad. What return, what annual returns do you hope to get over the next 20 years? Well, my usually targets 15% or more. But again, you have to have a balance in your whole life, like 100, you know, like people have a different life situation.

You have savings that you want for other things. There's time that can be adjusted. And when you buy stocks, there's not a guarantee 100% that you're going to get this 3.25% above inflation. And I don't know. Seems interesting to me. I mean, I want to be bad, but no, I'm sorry. That would be, if I were older, that'd be a great return.

I think I'd be okay with that, especially if you have a portfolio that's big enough where like let's say inflation's 3%, you can get 6%, guaranteed annualized returns, that's pretty incredible. With where stocks were at, like if I could only buy, say, an index fund, S&P 500 index fund, I think at this moment I would go with tips. That's to be 100 versus tips Index 1 at these prices I would be concerned that at all

Yeah I think I agree Caviot being that you know You can always sell one Yes You can always rotate if needed Yes it's not as black and white As I'm making out in that scenario Okay bubble watch Ryan Burry

Michael Burry The Sprout's Farmers market fame Is accelerating his timeline of the AI bubble popping. He switched his shorts to put options in 2027. He bought Micron puts for the June 2027 expiry at $500, which is like a cut in half from here, Palantir in the low hundreds in September 2027,

and a few others. What do you thoughts? Is he getting crazy or does this make you kind of think? It was already a little crazy. What did he see? Yeah. I could see a world in which, so the semiconductor boom over the last two or three years has been like a boom for the ages. Like go look at the memory providers.

Go look at pretty much anyone in the supply chain, Fab, Taiwan semiconductor, that kind of stuff. it's been so successful or they've been so successful over the last three years that it's caught more attention than I think almost any other boom in history semiconductor related which makes me feel like supply will come online like new supply will come online faster than it took in previous cycles I got something that may not sound bearish but it's the kind of the second derivative micron's price increase the rate of There's average selling price growth the rate is slowed down significantly. It could be about the top. I think that's an indicator that maybe were a couple quarters, if not soon, away from kind of their margins peaking. That probably means it's going to go down on the other side once you get oversupplied. Do you know what they're operating margins for this quarter, Brett? 85.

It was 80 or 85? Yeah, 80.7%. So that is they are more they should not be more profitable than meta, but they are. It just can't last. And I know, I know the demand story. I get it. But supply will catch up eventually. And I, and I am not, I think Michael Berry, I want to do what he's doing here.

I do think he's a little crazy. I mean, it's tough. Yeah, that's tough. He, of course, there's not his whole portfolio. To be honest, slightly regret subscribing to his newsletter for the year. It was not. Maybe we'll get value. Who knows?

This time next year, you could say, Bury, you were right once again. You're right once again. It's just not the stuff we like. No. It's not the type of stuff. It's not like the research is good, but it's not typically how I have us. So, no, he could be right.

But I don't know why you would. And I know he does it with certain risk parameters and all that, but why bet on the timing? Like, you don't have to. You get better upside. You get better upside on that. Yes. But you guess, yeah. The stock, I bet.

Well, we don't have to have what the put option. You're right. But like, if it's 10 bucks and it goes down to 300, you get 20x. Yeah, but the chances of being wrong are so high. Yeah. That's why I thought it was quite interesting he moved up his timeline. Like, what would change for him? him. He seems to think there's

liquidity is going to run out. All right. Other Bubble Watch, there was, there's a founder that said they financed this is a tweet, finance their own GPU cluster with stable coin debt and personal credit risk. That's about it. Yeah.

So I repeat that. Okay, they took out all, they finance their own GPU cluster. GPU, do you know GPUs? Computer chips. Yes. I don't know them well, but I know of them. They've got basically personal loans on, I don't know. This is something, someone said one of the clips you look back on when everything crashes.

Like, yeah, this is great. You got to take out all the adult. You can't risk being left behind. We have some questions here. Or questions. Maybe we dedicate more time with the small cap of the week. Save it for next week. Let's take some of these questions.

Someone has to about Pact 12 demise And why would it be why They were there Someone that said they went to our album mater So I thought that was funny They said why all they also rands That aren't Oregon Would have had been better to stay

I think he's a lesson Kind of like FICO We can connect the two You go for the money The short term money And you say look We're making more money This is great

But then you anger Some of your stakeholders And I think it's going to lead to A similar outcome to FICO At some point Short sighted Yeah Here was a question from

To the Point, at To the Point, in the YouTube live chat here. Sorry if you're not still listening, but we're going to answer the question. Anyways, he says, Hey, guys,

will raising interest around the world affect Adyam? Second question, does crypto pose a threat to remitly? Second one, no. Crypto, I think, if anything, is an opportunity. They use stable coins for

reducing prices when necessary. Adian, I'm assuming he means interest rates. Maybe. Could be a small headwind, small tailwind. I actually don't know. I'm not concerned. I'm really just concerned about adion locking its moat. Yeah, regarding remitly, I think the same question still exists today that existed three years ago when this sort of bear case was posed, which is the off-ramps are still expensive when it comes to crypto. So, you know, spending money in your own currency in your country, you're not really saving money through

crypto remittances compared to remittly. I'm worried about why is, that's the only, really the only competitor I worry about at the moment. Yeah, with Adyin, maybe there's a way that interest rates have sort of a knock on effect for them. I can't think of any real direct effect. If interest rates are going up, generally speaking, inflation is going up. Adion is a inflation protected business since they're a take rate on volume. So if anything, revenue growth will be higher. Am I thinking about that right? I mean, it's sort of the same as what, like a master card and visa. Yeah. I don't think the take rate, wait, it's not going to be higher, but they earned money

on the float a little bit. I'm saying if it's a, their take rate on volume won't be higher, but the volume itself will be higher if inflation is higher. If inflation's higher, yes, they are permanent inflation protection. That's right. Yeah, that's good. And they also hold funds from customers similar to wise. I think adding it is down because of the AI agent stuff.

I think that's why. I can't come up with any other reason. The stock, let's just say I'm quite interested at these levels. Before we sign off, because I know we just hit time, there was one thing I wanted to mention about the open AI deal. because they're whatever, supposedly raising, I think you said 30 billion at a $1.4 trillion valuation. That is a very

worrisome sliver of equity to raise. It feels like they didn't think... Well, they can't IPO. They couldn't IPO. Yeah, it feels like they didn't believe they could raise more than that. Whenever I see a company

raise the valuation from their last round, but significantly reduced the actual nominal figure that they're raising, I think they're worried. Yeah, what is, I'm worried about?

Their burn right, they raised $100 billion less than 12 months ago. People, that's all, that's, I think, what people should be thinking about. Okay,

last question on a little tease for the newsletter. Someone said, let's talk about cracking. Crackin robotics, not the, what is that, the Lochness monster?

Is that a single game? Yeah, or the Seattle hockey team, which is, a sad state of affairs. Let's talk about Crackin Robotics and the low forward PE, but a lot of that E has to occur on newly emerged entities. Yes, the stock's in a 50% drawdown.

As a little tease, I have an update on them in the emerging modes newsletter that people can sign up for in the show notes. What about one more rhyme before we get out of here? What's the best stock you almost but never bought? This is another listener question, i.e. a bullet dodge stock, essentially, when you didn't buy, it went down a ton and you thank your future self, thanks your past self for having a little bit of discipline.

I have one that pretty much went to zero. You remember I was almost on the fence of this one? The best software company in the world, according to Chamath Polyopatia? Yes. I remember you, yes. I'm glad I was like, let's wait a little bit. It turns out the numbers were fake. There were a couple SPACs that I was pretty interested in

that I think are down probably 90%. Vera Mobility was one where I was That business seems less scamy I guess than some of the other scammie on our lives The SPAC

generation of companies shocks me Like it never Every time I thought No this is the exception There was something wrong with the business Charge point holdings Uh

Whatever Fisker Fisker The best one, not Fisker, there's one even better. Fisker was the EV company that was like some guy's personal piggy bank. The Lordstown Motors, when the random like accounting guy was in the shop, who was a CEO, but like not an engineering guy, not a manufacturing guy. He was in that shop pretending to work. They weren't manufacturing anything with his yellow vest on.

He went on C&BC and he tried to like put his ear up like, I can't hear you. It's so, so loud in here. And Craver's like, what? Kramer's like, what, what's going on? Even Kramer's, it was probably shocked. Yeah, a lot of specs. So you say variable mobility. That was something.

I can't think of any other really obvious ones at the moment. I saw Latch pitched. Probably something from the SPAC generation, yeah. I saw Latch pitched. It is OTC, kind of untradable, and it has like a net cash position way above its market cap. So there's kind of some activist going in, a little deep value campaign going on. I have no.

idea what the business is like today, but like they haven't been reporting earnings, things of that nature. All right. Anything else before we got, uh, get out of here, Ryan? I think that's going to do it. We've got a, uh, a deep dive research report episode come out on Rawlins after this as well, after this episode airs. But that's going to do it.

Thank you, everyone for tuning in. We want to remind listeners that Brett and I are not financial advisors. Anything we say or discuss here on chit-chat stocks is not formal advice or recommendation. We may buy, sell or hold any of the securities discussed on this podcast. Thank you all again. We'll see you next time. Where some see heroes and others see egos. Bloomberg sees the era of billionaire athletes. A fad to some, the future of money to others. We see crypto's trillion dollar swings. The end of jobs or the end of human struggle. We see the endless funds fueling the AI hype.

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