Chit Chat Stocks - Investing Power Hour #23: Crowded Longs, App Store Data, Long Thesis For $ALLY

Episode Date: September 11, 2022

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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. All right. Having a little bit of technical difficulties, but we've got it running now. This is the Chit Chat Money Investing Power Hour number 23. So we've been doing this for a while now and people seem to enjoy the show. So we're going to keep doing it. Basically, for anyone that's new here, we go live on YouTube on Thursdays at three o'clock Eastern time, and And we can riff on anything, all things financial markets, basically whatever's going on in the financial world at the time or anything else. Basically, it's fair game.

Anything's fair game. Our only rule is we can't come prepared with any notes or anything. So it's got to be off the cuff. Let's start with you. What's new? what's uh what's the financial world looking like are was are we back in the bear market oh well i think this week's been kind of dull drummy pretty i don't even know if that's the right word been pretty flat this week right very boring extremely boring extremely boring

i always look at my holdings and i see everything within either up or down one percent i'm like all right this is great yeah yeah pretty boring pretty boring stuff but you know that's better than uh it's kind of what you gotta expect the last couple years have been uh abnormal sometimes you go through really really boring periods in the markets uh like we experienced kind of in our earlier days although we have you know obviously we're still pretty amateurish as we might as we might describe it but you know before covid the market was extremely boring for a long time except for a very few periods. But I was reading, it's conference season.

There's a ton of investment conferences going on right now. So I was reading match groups conference. CFO was talking. That was pretty interesting. Kind of the same spiel they gave on the conference call. So not too much new, but basically things haven't gotten worse. They haven't gotten material better yet, materially better yet. I always like reading those conference transcripts.

not the not conference calls but basically when they're at say morgan stanley or bloomberg or wherever because a lot of the times i find the executives are more open there um because i don't know if they think like i maybe sometimes they don't know if the transcripts are going to be publicly available uh but who knows why they're more open but they are so i like reading them yeah i think maybe if they are in front of a bunch of uh analysts they feel inclined to give more detailed info just purely from pressure um i think that might be part of it do you think those conference do you think those conferences get more views than the conference calls oh no idea i have i've always wondered how many people are actually viewing or listening or

reading conference calls like is it way more or way less than we think because it could just be you know some where i think i'm like one of 10 people exactly well there are definitely those small caps and micro caps where it's it's got to be tiny and those transcripts are impossible to find but the bigger one we might have a bigger audience on our youtube lives and right now we have three people watching yeah hey it's early in the stream we usually get double that but even yeah it's it's it is quite interesting i don't i have no idea because no one ever gives any metrics but the funny thing is the ones where people could get the most sort of edge or difference or sort of maybe like knowledge advantage over other investors are the ones where there

probably aren't a whole lot of people listening yet. The companies like Google and Microsoft and Apple probably get the most listeners on their conference calls. Oh, for sure. Because reporters are looking at that, I guess, because there's reporters that cover that from all of those companies from all over the world, but it still can't be that big of an audience. It's got to be small.

I'm always blown away by, I always think it's like the biggest deal, like whatever's happening in the investing world that day. But like most, I would say 90% of people don't give a shit. They just don't care. About what? Like whatever the big financial news is of the day. Oh, in the wide world? Yeah.

Like everyone, I'd bump that up. Maybe let's go at 99%. I've brought up certain topics in groups and people are like, yeah, no one pays attention and that stuff yeah yeah i've asked i've asked that before i was like have you heard of uh oh gosh what's a good topic oh what's one like this week the twitter and the must stuff no one no one keeps up with that oh yeah yeah like did you see the whistleblower on twitter's whatever thing you know like they're like what are you talking about like they're going to court that's that's weird yeah they're like i didn't even know which is kind of interesting because then

certain executives might be able to just tweet their way and more people tweet some things and people will just believe that but most people didn't even know about the bed bath and beyond stuff yeah yeah that was pretty tragic

well you know I meant even the yeah that part was really sad but you mean this the meme stuff and the potential pump and dump yeah yeah huh yeah no one no one knows about that stuff except for these weird online communities but

then for some reason back a year and a half ago gamestop became national news um don't know how that happened and then there was those senate hearings remember that people are like you watching these senate hearings about gamestop and i was like the most useless thing i've ever heard they're like so what did you do well we shut down trading because we were going to go bankrupt okay they're like how do you feel roaring kitty uh good times yeah i feel so long ago it does it does feel long ago um all right any topics here's again i'm just going through the tweets as usual here's viggy krishnan who is a great follow locked account, but usually lets people in, I think. So what do you believe are the most crowded

longs in the market right now? And he asked if you're a long or short, but I think the first question is just better for the discussion here. What do you think is the most crowded long right now, Brian? I mean, I think it's turned substantially since last year. I would have easily said, Shopify. C-Limited felt very crowded. Oh, yeah, but those are last year. I mean, C-Limited, I'd say the big three probably would be C-Limited,

Shopify, like you just mentioned, and then I'd toss in Nvidia last year. Tesla might have been in there as well. Eh, maybe not. No. I'd say it's maybe a better candidate for right now since it's one of the only

stocks that has held up. fairly i feel like most crowded hey look at the wait here's a question for you that i think that maybe shows i got a little fact here that might show that tesla is more of a crowded long what do you think tesla's short interest is right now one percent 1.9 percent all-time low pretty non-negligible here so i think that i think you know i think everyone's giving up it's pretty crowded along i think big tech right now is largely crowded but that's always crowded but you know like microsoft seems to be like pretty consensus um apple microsoft in terms of like more niche consensus i see a lot of people

banging the ally financial drum oh all right that's a good one which could be like i'm i'm actually kind of interested in that business so it's not saying that that's gonna be it's so consensus that it's wrong because it could very easily go the other way but it just feels like a lot of people are kind of interested in that business i got here's some answers from people just from the reply to the tweet costco i think that's a good one okay consumer staples i think also is a good one you got stocks like pepsi coca-cola pretty much flat on the year which is like huge outperformance um or year to date pepsi's up yeah flat uh coca-cola i can't remember i think it's probably similar that feels pretty crowded just because they kind of have that

narrative and probably the performance as well of being you know inflation proof and we're not helping it either because uh last time we said what stocks would we hold for 75 years you said like pepsi and hershey's that's right i maybe i'm on the yeah uh oh you know what else is consensus a lot of recent like uh digital i feel like digital driven businesses have kind of gone out of favor and it's skewed more towards companies with like physical assets okay what do you mean like american tower um a lot of the hell i can't even say a lot of the asset managers because they're all down a bunch but like people love kkr and bam and brookfield yeah they love them they love them

that's what i mean oh look at this look at this data center reads look at this comment here wow hopefully that's a compliment there mr william mcdougall uh someone said he didn't know what brett was gonna look like we got a whole bunch of podcast listeners that probably watch the videos for like the first times and are surprised by what we look like that's a thing about all the podcasts you listen to where you don't know what the host actually looks like that is is totally correct did you listen to any podcasts this week any good ones uh i mean invest like the best gaming one there was the gaming analyst slash investor vc investor was on invest like the best which i'm sure a lot of these lists a lot of listeners

already follow that show since it's so popular but i found it quite good um he had some good takedowns on vr that i hadn't thought of before and then the classic takedowns on web3 but also some interesting stuff what makes a good game financially what's changed what have been the big uh era shifters you know kind of like league of legends and stuff over the last few decades quite interesting so i'd recommend that all right i can't say that i listened to anything oh actually i did listen to one uh on the business brew with chad garcia who talks a lot about how to model around companies that are like serial acquirers and how certain companies get it wrong. And he goes really deep into it, which I'll be honest, a lot of it was over my

head. I would probably need to see it in writing to totally understand it. But it's probably one of the reasons that anytime a company makes a huge acquisition, I kind of shy away as an investor is there's so many complications behind the scenes that I have a hard time parsing out what's going to happen, how it's going to be integrated, stuff like that. Yeah, it's going to be muddy. It might work out a few years down the line, but there's just a lot of uncertainty.

Is that kind of the deal? Yeah. What were some of the other names that they said were crowded? Yeah, some of them didn't make sense. They said IAC, which was like, all right. And some people are saying tobacco stocks, which clearly cannot be. That is impossible. I think some people were saying some railroads, which might make sense.

T-Mobile. A lot of people like T-Mobile. Healthcare. United Healthcare. No one really cares about United Healthcare. Just the evil monopoly. That's really it. Primarily consumer staples, huh?

yeah i mean there's only like 30 responses but people yeah i think those are all made sense a year ago it would have been much easier to guess oh well 100 i mean shopify was some of the most i get so much hate i'm not that's not like uh everyone got so much hate if you said anything negative about them i said like it deserved it It was more like fair value was closer to $300 split adjusted. So a little bit above where it is now, I think. I haven't looked correctly, but I think it was a lesson though, because all right, you've got Shopify was pretty crazy.

Yeah, I guess I can say that with complete confidence. Now you, it was crazily valued last year. he spoke out against it and said how crazily valued it was got a bunch of hate for it and no one's turning now a year later and saying wow brett was totally right and said they're saying there's no benefits uh instead they're saying wow that guy was so annoying last year oh and i'm down big you know what i'm done investing i don't like the guy so it's like there's no benefit to yeah speaking out against it

well I think in a scorecard I guess there's no benefit for for I think you're

you're you're thinking of things in our view which is trying to build a podcast audience there's no benefit in that but if you're trying to

build a track record I think there can be a benefit for having that you know timestamped stuff like that this episode is brought to you

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nothing financial about that so what about this apple event apple event yesterday big uh big event seemed like it was kind of standard upgraded products people are going to buy them do you think it's the uh it's that whole meme from the office where they hold up two pictures and it's like iphone 13 19 iphone 14 they're like corporate needs you to find the differences between these two pictures it's like they're the same images you know oh yeah that's what it is the camera was better that's what i saw and then i thought it was some revolutionary software changes i know and everyone took everyone took a bit like people were taking pictures and posting on twitter this picture was taken with the iPhone 14

and I was like it looks like any other picture on Twitter yeah I know I don't notice the difference in resolution I'm sorry hey yeah and I've got Apple products but I mean I haven't upgraded this bad boy

in god three years three years yeah that's been the bear case forever is the extended upgrade cycle hasn't materialized but who knows who knows like a new watch too yeah the new nothing really crazy though from anything i saw right no just they just had the i mean just with the watch the they had the

satellite thing for sending out messages as an emergency um which they always say like when someone's uh like lost at sea or biking somewhere in the woods and it's like that's the so we love to brand themselves as life alert even though it's basically just like a social flex. I know. No one's buying the Apple Watch because of the life alert or not even life alert because of the

the in danger outdoorsy stuff. They're buying it because it's like luxury. I'm actually not a huge fan. I have an Apple Watch. Never wear it. Oh yeah. I've noticed you haven't been wearing that recently. It just obstructs me from typing.

It's kind of just annoying. to type with it kind of catches a lot on the computer not really a fan of that and so you don't you don't use it for the health stuff or the whatever yeah and i do like uh like i try to do some weight lifting and having that giant i mean this probably goes with any watch but having that giant piece of metal back there if you bend your wrist at all it kind of catches yeah well i mean you're you're lifting so heavy so you lift anything you could push against the ground and it's gonna feel the exact same way yeah that wasn't meant to be a humble brag for anyone who's listening um all right yeah if i was gonna get for the fitness thing there's like those little

rings or whatever they i think they're called aura rings um i would maybe get those instead i don't know the apple watch though is so successful it uh yeah i don't understand the hype really don't oh yeah traditional watches they'll they'll make a comeback they uh it's interesting that anything that's been below the rolex style of like 5 000 or above basically that way i forget what the watch the apple watch is it's like 500 or something like that all the standard watches or regular watches that were kind of within that price range were probably up to a thousand dollars have totally gotten obliterated So like Fossil, I believe, is a publicly traded company.

Fossil. Yeah, Fossil Group. Is that it? They are still out there, too. No, no, no. They got acquired by Google. Saved, actually. What's the other one?

Garmin? Garmin's available. Garmin actually might be getting killed by these recent upgrades, though, because Garmin has a big... I don't know how big it is, but they haven't done too bad because they've had some other products, but now Apple's trying to kill them with some of the new updates for the watch. And probably it's inevitable that these sort of watch-based devices are... Jose says, Ryan, you should wear it.

What happens if you get lost at sea? You know what? If I am swimming at sea in the middle of the ocean and I get lost out there, maybe it was my time. I don't know if the watch is going to save me. I also saw a friend lose their watch in the water, and I think there's a higher risk that you lose a high-ticket item like your watch in the water than you have to save your life by calling someone while you're in the water. So I'd almost not wear it anyways. So it's a lose-lose.

Those commercials are very fear-based, too. I find it quite funny. Not funny, but it's strange. I kept seeing them during football last year. a lot of their ads have been fear-based the one about like the data around like basically just like basically just a bash ad at facebook oh yeah but people love them and yet they're they're pretty um confident maybe they got a they got a big ego on that because it's in my spite portfolio it is in my spite portfolio and i got a feeling my spite portfolio is going to do better than my

real one maybe all right well we'll see you have to track it but tim cook and that johnny uh i believe his name is johnny ive was at the code conference and they were talking about stuff and you know they got asked about privacy they got asked about all the sort of stuff that they always get asked about they're pretty cocky about the privacy stuff they were like quoting steve jobs and saying like this is what he would want and stuff like that and i'm like you're killing small businesses but then they also were asked about messages and someone was like my grandma is poor and has an android or something like that and when we message it totally ruins like it is you know you know how it goes yeah the uh and he said literally well tell her to buy an iphone

and i was like all right tim might be a bit rude like i mean i don't think they are as unaffordable as some people broadcast that's true but i mean median income in the united states like 60k a year yeah you can buy the cheap one 29 a month it's a lot that's a lot i mean the cheap one the cheap one essential pretty essential thing to have yeah yeah people always quote the highest price yeah i tell you what it's been a pretty boring week but all right here's here's one here's one what do you think of the new kardashian private equity i think it's going to do really well and everyone's bashing it and i think they're going to probably do a lot better than

most. They got a competitive advantage and it is the Kardashians Instagram following. I mean, although I don't see what they need to do. You could win with any product. She could tell people to put mud on their faces

and they'd do it. I think they do do that. Isn't that what facials are? Maybe. I honestly don't know, but that's the point. Any product she launches it could be a totally inferior product but if she's doing it it's the right thing to do and so instantly instant sales yeah yeah and so you having her as sort of a

i don't know she could just be the chief marketing officer even though she's brand is probably a general partner yeah and i think uh i mean those type of sales seem a bit fleeting the the influencer sales right where you kind of get that big jump and things might fall off but But I think it's definitely they have an advantage for private equity. That actually does. That reminds me. Ulta Beauty reported somewhat recently. Incredible quarter.

Really? Yeah. The business has done exceptionally well. Outperformed the market over the last three years. Outperformed the market by a wide margin this year. I don't know. Might be worth a look. the other thing is it's really hard to i think it's hard to disrupt with some online model

yeah it says people want to smell them a so they want to have them in person secondly if you're gonna buy a fragrance online especially like if you're thinking amazon there's so much risk that it's like diluted down with water or some crappy merchant and it's gonna to be like basically a fake product i don't know there's a lot of stuff that you kind of want to sample while you're there and see your options yeah i mean if you're going to be on amazon you're going to buy it you have to buy a product you've already used before yeah but then at that point like i think the element of trust is plays a role and you just end up buying it from the brand you trust the most like either directly from the brand or directly

from the store Ulta, and you can get same-day delivery with DoorDash if you want. Yeah, that sounds like an expense nightmare. Beauty supplies, same-day delivery from DoorDash. That sounds like an absurd

amount of fees, but yeah, I mean, the business seems pretty good. Seems pretty darn good from what I looked at a couple years ago. I haven't looked at it recently. Maybe we'll have to do a not-so-deep dive on them at some point in 2023. A physical retailer, so like they have, let's say, a big physical footprint, has done the best over the last decade.

Exclude Costco. What do you mean best? Like stock price performance or? Results-wise. Like I've seen the best performance financially. Why exclude Costco? I don't know I feel like they're just an outlier I'm going to load up the old

wide charts here at the Motley Fool with some companies and let's see who wins on a revenue I'll just do revenue per share what's the last one okay one second yeah well that's in

my list alright over the last 10 years revenue per share of Ulta Beauty, Home Depot Lowe's and Costco who do you oh five below maybe add that in there five

yeah I'll add that all right here are these we'll add five there too oh wow they're the winner okay who do you think is last in revenue per share growth over the last 10 years now some people are the cohort again

five below Costco Lowe's Home Depot Ulta Beauty now some are starting at higher base so it's not fair but lows is the lowest yeah lowest is costco my friends but still 112 growth then we got home depot 213 lows basically the same as home depot at 230 then ulta beauty 453 five below 516 here's who i'm going to add dollar general oh that's a really well-run company people should check out the science of hitting throw amazon in there covers them extremely well yeah amazon's aws all right i'll add them in there

the the charts the charts gonna get crowded uh let's read dollar general first 223 so basically in line with Home Depot and Lowe's. Still pretty solid. Now, Amazon. Oh, click. Amazon is the winner. RIP to everyone else. 659%.

There was a fantastic podcast about AWS from Acquired. Came out either this week or last week. I don't know. Saved in my feed. Three hours long. That's

honestly they they were a little amazon aws specifically okay i gotta admit and they would admit this as well they're pretty bulled up a little bit i think they they disclosed that they were owners of the stock but it wasn't like they were just pumping it at all it was very informative about the actual business that i mean people talk i think people might be underrating AWS right now. A few years ago, it was kind of overrated. They're like, oh, AWS is going to be the biggest company in the world. Spin it off. I think people are maybe underrating

AWS right now and the value it's providing for Amazon. What's interesting is that they, and I didn't make this connection because I don't follow Amazon that closely. AWS, their capital needs are super high and is a huge... I don't know if they were... When they were talking on the episode, I don't want to speak for them. I don't know if this is basically them saying what Amazon was saying or their theory, but they were saying that free cash flow looks so bad for Amazon right now because

the AWS CapEx build-out is so massive and is becoming a larger and larger part of the business that it's actually making the short-term cash flow look bad because they have to build out all these data centers and then they're not they're not it takes a couple of years to get them ramped up if you get what i mean i'm no expert on the topic but i think that makes sense and it might be you know masking a lot of value being generated okay yeah that makes sense the i don't know i feel like that's probably what most people are accounting for in their amazon when when they're valuing amazon today though so i wouldn't say it's necessarily being underrated well look at the stock price the market cap maybe maybe it's the

retail that's being underrated but part of it either either one of these companies i'm suffering like either the retail or the non-aws side is not a good business or aws is not a good business um or they're both good business or Both good businesses and the stock is absurdly cheap. If Amazon stopped with unnecessary expenses, let's say. No, experiments. That's what they like to call them. You might call them.

What do you think Amazon's margins could be? Not AWS, but Amazon as a whole. As a whole? Keep in mind. We see AWS ads on the back of city buses, which there's no way that's money well spent. There's just no way. Yeah, but I mean, that's just an inconsequential. It's indicative of a culture of experiments or excessive spending.

How about, yeah, maybe they're not afraid to spend. Yeah, it's totally true. I know someone who recently like joined like whatever their program, they have like some program. I think we might have talked about this already for like, it's like their first year. Yeah. You talked to, I think, whatever, two weeks ago, maybe or something. Yeah. And they're bringing in, they brought in like a hundred people, all the same age, all within like the same department, put them in a hotel for like a week, just like these exorbitant costs for tons of employees.

And I just have to imagine that isn't totally necessary. yeah google has buildings all over seattle that i see all the time just vacant completely vacant and i'll drive by at like 12 o'clock on a wednesday there's not a soul in there and they've got like prime real estate and i just think like if they wanted this business could have 60 operating margins yeah yeah that's uh join the join the camp let's get these expenses It was reined in. Amazon as a whole, I mean, there's a difference

between profit margin and cash flow margin right now just because of the warehouse and AWS build out. Oh gosh, I'm afraid to say anything because I know people follow Amazon so closely and we'll have some sort of model

that has it at three decimal points. But I will say operating margin 15 i don't think that's unrealistic depends how much of the business is made up by aws but yeah and then almost 80 billion dollar run run run rate and that's 30 operating margin and then advertising i think is the one that maybe people are forgetting because retail on its own would be lower margin but you add in the advertising which is growing quickly and I think you can bump it up to 15%. Lord of the Rings, what did you think?

I think it was good. I don't know why people, there's those weird curmudgeons that for some reason are always in the investing community on Fintwit that are like, it's not the perfect thing or whatever. I was like, I thought it was fine. If I could go long,

Lord of the Rings, whatever show, Rings of Power, short, the new Game of Thrones show on valuation i would do that whoa whoa whoa based on valuation i know you don't know i have but i i know valuation valuation on the game of thrones only i like it but it's i'm talking to value i know you never short valuation but never short based on valuation but um and i have no catalyst on the horizon but the game of thrones show is great but i think is probably overvalued and i think the rings of power would be undervalued either way i think it's not good for netflix

that's all i was thinking about is like amazon it doesn't matter because no one's unsubscribing or no one's subscribing to prime to watch that if you know what i mean correct so i don't know how financially beneficial it is but i kind of think the house of dragon um rings of power and then you got this star wars show coming although disney's already been pumping out so many different shows i i have no and maybe it's just kind of the timing personally and i might maybe just looking at me anecdotally and not that's not how everyone else looks at it but i'm not really looking you know i haven't watched netflix very much I don't know

I don't have any I don't have any urge with these two shows out yeah I've been watching these two shows and then sports speaking of which

speaking of the media landscape and valuable properties NFL starts tonight that is true and when most people are watching this it will be

or listening this will be NFL Sunday and it's on Prime so we'll see there's going to be so many old people that are like

how do I just so frustrated that they have to download some app to watch this. I'm growing more and more convinced that most of the players in the media space, like that are spending on connected TV content are going to be losers. There's not going to be a good return on spent. You mean just streaming video streaming? Yeah.

I think it's going to be way too competitive. Paramount Plus, HBO, Roku. I'm pretty, you know, at first I was kind of optimistic about this Roku, but I'm kind of, I'm agnostic to what I use as a smart TV now, honestly. Roku hasn't really gotten better in the last three years. And they made some moves from a company perspective, not really for the consumer perspective that makes me nervous, which we've discussed before. Just the content stuff and the advertising has really been not as good as,

you know, the rollout hasn't been that strong. But yeah, I mean, I agree. when you have amazon and apple investing in both scripted and sports stuff that's tough that's just tough i think amazon should go even further into sports because that's how they can insulate themselves from walmart but i don't know it's also tough because they're the only ones that can make it viable was it walmart considering a video service or am i getting that wrong oh yeah they they sent out that rumor about once every six months they were gonna buy tiktok yeah they were gonna they were one of the people that are gonna buy tiktok they were i don't even know teaming up

with someone for a streaming service yeah i mean then you also have youtube in the mix who's gonna start offering channels and the home screen on a lot of rope on a lot of smart tvs are not home screen one of the biggest channels is youtube and personally i'm just on uh i'm on a lot of youtube i use spotify as a stereo it doesn't really count and then whatever streaming service has something i want to watch so i guess right now amazon and hbo max yeah it's just tough environment and i don't know whether that's bullish or bearish for netflix i think that's why the stock you know what i mean it could be great for netflix because they have the scale heard some great arguments that it's going to end up being great for Netflix because of the scale

and the weather, the storm, but I also see it being bearish. If you're listening to this ad right now, we know you're already a listener to our show, but for our avid listeners, we've also started a paid membership service called Chitchat Money Plus that extends beyond just our podcast. Every Tuesday, subscribers get access to one not-so-deep-dive research episode that covers everything you need to know about a company. You also get an email newsletter with our written show notes, important charts, a transcript of each show, and access to our Chit Chat Money research files. Chit Chat Money Plus costs $5 a month. You can subscribe directly through Spotify

or Apple Podcasts, or if you listen on another platform, click the link in the show notes to go through the simple steps of signing up. If you're a regular listener to the show, we think the membership will provide tons of additional value. On top of the stock research episodes, members will get one Arch Capital Fund episode a month where we outline why we bought, sold, or continue to hold a stock in the Arch Capital Investment Fund along with shows on our broader investment strategy. Sign up and become a Chit Chat Money Plus subscriber today. We can't wait for you to join our community. What do you think is the worst run company that... What do you think is the most improperly managed company in the world maybe more than 20 billion dollar market cap

oh geez you're that's uh i don't have to say something here i was told by that one guy i can't say pass on when you ask those questions so i'll have to give an answer let me i've got an idea right now all right well let me pull up i don't have like a short watch list because we don't short so it's like i can't pull up any sort of watch list uh maybe let's maybe maybe we'll we'll narrow it down to tech businesses okay there's a lucid group and that doesn't qualify that's not tech okay i don't care if they brand themselves as tech uh it's it's that's barely 20 billion dollar market cap um poorly run would twitter be on on that list yeah that's is that over 20 billion because i'm looking at something right now i mean

it's clearly got to be twitter i'm looking at twitter right now and it's got a who to follow thing oh yeah yeah i got this i got this update too it's got i something philadelphia promoted some radio station and then someone i already follow yeah now i've been getting the that you might like and it's people you already follow. Some bugs going on there. How can that not be fixable? Yeah, I think the answer is clearly Twitter.

I guess that's a safe one. If account already follows, then don't show a promoted account. I don't know how you got to code that in, but just throw it in there. I don't think it would be... It cannot possibly be that difficult. No, it cannot either.

I think I might be able to do it. I think, yeah, obviously we can't build everything from scratch, but we've dabbled with some whatever free tutorials before, and that seems like one of those things that is one of the easy things to do when you're coding something. It's not nearly one of the hard things. All you do is just create an if statement. If it sounds impossible, I don't know.

But maybe just download Facebook and copy whatever they got. Here's some data from our good friend, Sean Emery, who should get back on the show soon although i'm sure you've been working on that ryan as the resident person that reaches out to people um but i'm sure he'll be back on soon he has some great data especially on apps and uh let's see he had a little tweet here summarizing stuff one tiktok is still strong whatever instagram second best month ever three be real is going strong that's I gotta say that that one's just I think that dies yeah that's gonna

yeah it's gonna die or never be able to make money because it's set it it's like we set a we've set ourselves up to be the opposite of Facebook and Instagram right or whatever that's kind of the pitch right be real or probably the opposite Instagram I guess is more of the

thing it's like well you set yourself up in the opposite ways to make money is kind of what you're going for but kudos to them for getting a lot of downloads here's one that's interesting though whatsapp fourth best month or sorry best month ever in the u.s they've been launching some interesting products i think people say that as the facebook thesis you know this will be the decade of whatsapp i could see it happening however it's got to become such a large business because facebook's

market cap or excuse me meta platforms this market cap is already so large so i kind of get and any cash that it generates like is that's great and it's going to be put to great use as a part of reality labs yeah after listening to that uh long time probably the best you know investor in the gaming space um outside of you know the long tenure i mean he invested in like Activision or he worked at Activision investing in like EA League of Legends whatever he was saying that VR is so so far away and doesn't really make sense sometimes because he's like you're not going to be wearing this haptic like you don't need like the haptic feedback suit like people aren't actually asking for this they don't need that sometimes you don't need that much of a

an immersion and the headsets you get like they need to be it's so much smaller because you can't like when someone games you're in a game for an hour two hours at a time with the headset on you get tired it's not it's not for like it's supposed to be relaxing i don't know i'm forgetting some of the other bear points he had on vr but i just kind of think yeah you might be right there i mean what's up i think personally vr this is i haven't listened to that episode but i agree with some of the points you just said and no one's clamoring to put on a headset like no one when other products were launched there was like some of the most successful products everyone wanted it it felt like the

the playstation and now the first xbox was kind of you know the xbox 360 did better but the first playstation people are like oh my gosh this is fantastic playstation 2 sold like 150 million copies all right like yeah there's just not that desire for a quest yeah it's not like yeah all right what do you think about this and i uh william mcdougall mcdougall sorry if i'm saying your name wrong i do see your question in there we'll touch on that in a second but What do you think about this? Asana has been burning through a fair amount of cash. And I would maybe describe them as like project management software for businesses. So, I mean, it's configurable probably to your needs, but... Workplace software up 24% today. Is that why you're... Yeah, yeah. So, they have been burning through a lot of cash. And this quarter, they sold an equity offering. So, they issued shares and sold all of them to the CEO. $350 million private placement.

Okay. So, the share count didn't go up. Is that what you're saying? I'm pretty sure. Well- Maybe only some. Okay. So, at least some of the share count, it wasn't diluted. It was basically a weird, yeah. I think it may have been new shares. Well, I don't think he's buying them directly from the company. Yeah. I mean, it's a unique situation because Asana was founded by one of the founders of Facebook, who's absurdly rich.

So, but I like, I like that. I like it. I like it for sure. He's confident in his business. A leading work management platform for organizations today announced it has sold $350 million of shares to the company of the company's class A common stock, Dustin Moskovitz, Asana's president, CEO, and chair of the board of directors in a private placement. the 19 million shares of class a common stock was sold was determined based on a closing price of 18

security sold i still can't tell if that means it's from its existing share count or new shares but yeah well but here's the thing it says the company expects to use net proceeds from the private placement for working capital and general corporate purposes that wouldn't be there'd be no proceeds if they were he was just buying them for their outstanding shares no i think that's oh yeah yeah yeah all right it might be diluted but who cares if he's having a ceo who can literally just backstop the company whenever it's needed it's nice it shows that he's dedicated and he thinks they're gonna be i i would i would like it it's an industry i think is really tough to do tough to invest in and it feels like every stock is overvalued,

but kudos to him. I think I would be, that'd be a positive sign if I was in the sauna shareholder. I mean, I think that's why the stock's up 25%. Yeah. Well, over the last year,

it's now officially down 75%. So yeah, it's like a little blip on the screen. You can barely see it, but the, it makes me think like, the results were okay i think the results were pretty good they just are burning a lot of money also it's like our non-gap loss per share or our earnings per share loss was better than expected

because yeah i just because we diluted more than expected yeah that stuff just i i honestly don't don't even read it there's so much nonsense in earnings reports there's like eight there's like five things at best i actually want to look at i think john rotante coined it well as financial diarrhea that is a lot of it it's just that i agree i agree all right ally you want to talk ally give i don't know i don't know it takes i do not know much about ally except that some people i trust say it's a well-run bank and it's a digital bank so the cost so no some cost advantages by not having to um set up physical locations to service customers yeah and they don't have the existing ones that are basically going to be obsolete or are obsolete and are going to get you

know kind of taken out of circulation yeah it's interesting for sure it seems from what i've read seems like they're well run with the car lending business their buyback stock what doesn't interest you about it financials just not not i'm saying it financial companies not the financials it's just really hard for me to understand those yeah wow stocks really down big and they're accelerating that buyback um yeah yeah i got a comment here the buybacks yes i'm thinking the same thing um i mean yeah there's a lot to like but it's just uh i mean maybe we have to do 24 buyback yield that might be off that might be off uh but if it isn't yeah pretty aggressive i mean share count in 2021, $370 million

and we're already down to $308 million. So, very, very aggressive. Okay. I think, okay, honestly, if it's a financial, I always check if Berkshire owns it because they're the best financial investors. Berkshire does own it.

That's a very positive sign if it's financial because he's the best financial. Yeah, Buffett's the best financial investor out there. So, yeah. uh tons to like i don't know it too well though done so like oh wait no i'm like is this going

to be one where you throw it on your watch list and then it just sits there for years i need to get around to researching that one a little deeper yeah yeah is the most like cliche thing investors say is like hmm looks interesting oh yeah well You know what that means? It doesn't interest me. Yeah. And I say it all the time. You just got to say something. Yeah, I guess Berkshire owns almost 10% of it.

Look, there's going to be a lot of stocks outside of a circle of competence that seems promising. Yeah, I mean, if I could get comfortable with owning a financial, it seems like one that I would want to research. Buffett owns 10% of Ally Financial. I know. I just said that. Yeah, I mean, it seems really, really interesting.

Yeah, it's just outside of my circle of competence, which could be a cop-out, but I think it's almost always better to play it safe with the circle of competence because there's so many companies out there. but we should definitely research it for sure. Maybe we'll have to do, we're doing the themes now on month to month.

We'll have to do a financials theme so we can kind of maybe expand the circle of competence. Because I think I would need to look at multiple financial companies. It's just a big hurdle for me to research it. But like I said, we got a comment here, great ROEs, which are very important for a financial company.

At least I know that. I mean, the numbers, they look fantastic. I don't think there's much else to say. gator capital don't really know this account that well but looks interesting says buying back 15 of the market cap this year retail auto loans turnover into and a half years floor plan loans and corporate loans are floating right don't follow that all entirely but looks enticing and maybe we'll have to uh ask him if he'd like to talk about it on the show yeah exactly that's how we research companies is we ask an interviewee to come on our research yeah it's uh not a bad

strategy um we had a comment here from matt saying that it's a small enough position for berkshire that it could be ted or todd that would make sense um but i also say i'm the same way i trust them the same way i trust buffett i think for uh yeah especially financials um specifically there are certain sectors where you definitely trust uh what berkshire is buying do you think switch your bank ever i am still at bank of america so i doubt it i'm still there i've been there since i was like 12 years old so i doubt it but i'm not i'm not in a i don't know the savings like just goes into my brokerage account so it's not it's just kind of a small spending account i'm worth not much money to them okay i don't know i thought about it i thought

about moving my money to ally just to see but the big problem is that i have to go into every place what where a bank account is connected i have to do all the work of like getting you know getting a new card getting a new account google can help with that google's beautiful that you insert it once and it updates across everything so really that's my that's yeah little android pitch for you all right here's here's let's get back before i close out there's some other good from sean's summation of app downloads um here's the last one here's another one duolingo best month ever is that surprising to you surprising i i not maybe i don't follow why would people be learning more languages right now i

guess is there any like catalyst driving that in the world right now yeah i just kind of thought that they were a bit of a covet beneficiary and clearly that's been wrong where you know people are stuck at home they're finding something to do and they were like oh let's download duolingo and learn a language i would think people are more busy now but maybe since travels back up international travels back up maybe that's helpful although i did download the app and i stopped using it so well you just don't have commitment

I don't I don't have commitment to learning a language it's not it's not very fun for me um all right yeah any other on that I'm looking at a list right now cheapest US stocks over what metric over a 10 billion dollar market cap just earnings

on EV to 10 price to earnings I know it's not not not the perfect metric but whatever a bit of a screener here Can you guess any companies on this list? Over a $10 billion market cap. And the highest price to earnings on this list is 7.6 times. So I'm trying to think of our own portfolio,

which I think the only one that might be in there would be Nintendo, but I think it would not be. It's US stocks only. I have no clue it's a lot of like unloved areas financials homebuilders the homebuilders yeah the homebuilders yeah that makes sense

people think it's it's over Dell Technologies is on here AT&T is on here AT&T is fake though because of the debt okay HP Goldman

general motors wow these are so enticing was your test in any of these uh i don't moderna no i can't oh yeah i can't forget when someone keep people kept telling me what's your vaccine play you got moderna or visor what's your vaccine play oh man what's our web three strategy what's uh yeah that good times that was a more liberty media serious xm we did i don't well again the debt i don't think serious xm is there because we just did a show on them i don't think that that number's wrong no but i think there's a serious xm stock and then there's a liberty serious tracker stock that's like different oh yeah yeah lumen technologies they have a stadium ad they can't be invested in god no god no the seattle stadium

i don't know what a blunder on the name like first of all if you're lumen technologies which i'm not 100 sure i know what they do but i have a good idea that they should not have named that stadium and it was a worthless ad because no one knows what they do and they've had that stadium for like 10 years yeah like stadium ads only make sense if it's a consumer brand that everyone knows um so yeah i don't know why lumen it's like uh it's like lumen was definitely named because century link they're trying to get away from the century link name there was like fraud back in the early 2000s i believe however that doesn't mean like that could be fine to change your name to lumen to get away from that it's kind of like philip morris changing the name to altria to

you know basically basically like what is altria but an altria stadium would be absolutely useless and same with lumen i don't know i think that might do all right altria stadium no way you know for the old timers uh yeah most of these aren't super enticing but i got a feeling if you bought the whole basket you'd do all right um you're probably correct but i hate all of them i don't know why um a lot here that entices me a lot of banks A lot of banks. What is Carlyle Group? Why do I know that name?

That is a private equity firm, I believe. And they're actually one of their ex-partners, just partnered with Kardashian. So, yeah. I think that's why you might have heard it recently. But Carlyle Group is a famous investment firm. Ally Financial, the third cheapest on the list. Oh, gosh. I know.

That's why I say it feels crowded Because everyone's talking about how cheap it is Yeah I guess that can't get dangerous We're running up on time We have one more minute Anything else here Just tease some stuff that we got going We got the interview with Devin

Devin I cannot Sorry I don't know how to pronounce your last name British American Tobacco That will come out Before most of you That will come out before this comes out Before most

People Are listening to this We've got an interview with Ben Tuohy Who runs A website called Vestral Research It's like It's a catchy slogan I think it's called buttoned up equity research

But it's really good He's got some really good deep dives The two that I liked the most were s&p global and ally financial or not ally sorry callaway got ally on the mind um callaway and then he's got one coming out this weekend which he's going to come on to the show and talk about um not so deep dive schedule gaming concluding we're chugging through the gaming month if anyone wants to talk about xbox tomorrow which is a bit of a structural challenge just given that it doesn't it isn't publicly traded on its own so doesn't report earnings but it'll be

i think it'll be very fun to discuss them then we're doing some smaller gaming studios to investigate them capcom rovio and yeah if anyone wants i've got some anecdotal anecdotal from rovio that'll spoil now rovio entertainment owns angry birds they own that brand um and i played like an angry birds game at top golf like you can shoot the ball almost like it's that angry bird licensing revenue there we go i know and it was like the most fun game we played there and it's kind of an equalizer across different you know skill levels yeah yeah that's why you liked it hey i was one of the better ones there actually oh gosh that uh at least on the angry birds game can't imagine that that group uh yeah and then if anyone i think we'll probably have that running in

this but if anyone listening or watching those not so deep guys five dollars a month subscribe on Spotify or Apple directly through there. That's how you get access to those ad-free stock research episodes. Best way to support the show if you like to chat money. All right, Ryan, I think that's good enough pitch for everyone.

Yeah, that's going to do it. We should throw a disclosure on this. Brett and I are not financial advisors. Anything we say or discuss is not formal advice or recommendation. We are general partners at Arch Capital, so clients may have positions in the securities discussed on this podcast.

Thanks everyone for tuning in. We do this again. And a reminder, Thursdays, three o'clock Eastern time on YouTube, just look up Chit Chat Money. It'll have a live feed. You can just click on it, ask questions. If not, you can listen to this in podcast format. Thank you all for tuning in. We'll see you next time.