Chit Chat Stocks - Investing Power Hour #25: $BYND COO Gets Nosey, $IAC SOTP, Is the Gig Economy Screwed?

Episode Date: September 25, 2022

The CCM Power Hour is a live-streamed show every Thursday at 3:00 pm EST. On the show, Ryan, Brett, and a rotating list of guests have an unscripted discussion on a variety of investing topics. You can watch the show on our YouTube channel here: https://www.youtube.com/c/ChitChatMoney Follow the show on Twitter: https://twitter.com/chitchatmoney ****************************** This episode is sponsored by Stratosphere. Get started for free at stratosphere.io to get access to powerful data visualizations, specific company KPIs, and much more. ***************************** This episode is sponsored by Quartr, the new way of doing company research. Access conference calls, presentations, transcripts, and more for FREE on your mobile device. Download Quartr on the App Store here: https://apps.apple.com/us/app/quartr-investor-relations/id1552412128 Download Quartr on the Google Play Store here: https://play.google.com/store/apps/details?id=se.quartr.android ***************************** Access our “Not So Deep Dive” episodes by signing up for CCM+. Sign-up directly through Spotify or Apple Podcasts. If you listen on another podcast player, use this link and create a private RSS feed: https://anchor.fm/chitchatmoney/subscribe Need more information? Check-out our launch newsletter: Here ****************************** Learn more about your ad choices. Visit megaphone.fm/adchoices

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join us on there today. 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 Chitchat Money by Ryan or Brett or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. All right. We switched up the roles today. So hopefully it's working well. But this is the CCM Investing Power Hour. This is the 25th episode, the Chitchat Money Investing Power Hour,

to go with the full name. And this is the show where Ryan and I, the hosts of Chitchat Money, go through whatever topics are on our mind. The only rule is that we have no preparation outside of Ryan's subtle background there, which I don't think we'll be talking about because there's no news from that company this week. But for all the small amount of people watching on YouTube. There you go. Yeah. And I guess just to do the quick pitch, if you're listening to this on Apple Podcasts or Spotify, which we know the majority of people are, you can also watch on YouTube, which is linked in the show notes. Watch for free and participate with us. Ask us questions, all that good stuff. You can ask us questions in the comments. Heckle

us about any of our takes in the investing world. Because I think if you make any take right now, given that almost all stocks, value, growth, whatever, are down 20%, 30%, 50% over the last year, we can all willow in our misery. But Ryan, I was thinking about it. This is about maybe the four or five-year anniversary since we met Phil Knight, if you remember. That is right. That came to my mind. He was eating a Subway sandwich. Him and his boys were housing Subway sandwiches on this dirty table.

and brewskis they had beers in hand uh for anyone maybe to provide some context for that story oregon football was playing washington state football which is the university in which we attended and uh we we saw someone who looked an awful lot like phil knight we thought is that phil knight and we i think you said it out loud and he picked up his head and like looked at you as you said that but his name tag had his wife's name so i don't think he wanted to draw attention so it said like penny knight or something like that and uh well it was him we uh we went over we got a photo um i think his friend did bunny ears behind one of us i've got that picture actually i might be able to find it but yeah anyway one of the one of the goats one of the ogs

and a good thing they lost the Oregon lost so that was nice probably what the greatest retail brand

of all time yeah yeah 100% oh yeah I just can't yeah well maybe it depends if you

broaden that out to food so but X food probably but yeah I thought you know

Brett usually I'm usually in the office so not today if you're watching this um and i know by far the majority of our our viewers are actually just listeners so they're probably not going to care but i i don't go on a lot of hikes so i don't have any cool backgrounds to throw up so i thought i'd put this wonderful chart up of dropbox's free cash flow per share yeah i've gotten some so just to be clear every time i talk about dropbox's free cash flow

and even their free cash flow per share, I get a comment that says something along the lines of, well, what about stock-based compensation? So I wanted to point to it. This part is very important. The per share. And as you can see, it's trended in the right direction over time.

Yeah, nice little pitch there. Yeah, good pitch for the company. Those are our homemade charts too. we do like to make the charts ourselves so still not quite as good as alex morris's uh charts but uh we'll get there he does have the nice labels on there yeah they are good looking if he could just give like a little chart tutorial on how he does it that'd be great i don't think it's a a giant step process but either way uh any news this week it's been kind of boring outside of the fed which i doubt we're going to want to talk about because we really have

no takes on it's probably something that people don't want to yeah federal federal open market the federal open market committee convened for anyone that's checked their accounts in the last few days you probably know that um not a whole lot i never really get that much value out of actually listening to it. I get zero value. I don't think we even need to be the 10th thing that someone listens to this week talking about the Fed. Here's a funny... Now, this could turn into a discussion, but I think it was quite funny. Jim Cramer had a nice tweet. He was visiting Salesforce doing his due diligence, I guess. And he said, how fabulous is Dave Grohl live last night at Salesforce, which I thought was quite funny after Jerry Capital, a friend on Twitter,

said, insert margin joke here for Salesforce's margins. Because I don't know, looking at a company, looking at their expenses, you're like, all right, what are they spending these operational expenses on? What are these employee costs going into? And apparently at Salesforce, course, they find it necessary to have Dave Grohl, one of the probably most expensive musicians in the world, to get for a live show playing for a small audience at their headquarters, right? You have to masquerade profitability, and there's only really one way to do it, and that's to spend exorbitant amounts of money on things that are completely unnecessary. Yeah. Now, another story I saw from expenses, and maybe a little bit different than expenses, was the Business Insider report about Goldman Sachs. Here's the headline.

Goldman Sachs insiders say they are concerned about CEO David Solomon's push to build his personal brand. They point to staff help for his DJing. His DJ name is DJ Diesel. For anyone that doesn't know, I'm not joking about that. He is a real DJ. And use of the firm's planes, among other things. Now, do we need to get the hashtag trending free DJ Diesel? Because I think the man is getting, what's the word?

They're holding him back to his true potential. Because as a Goldman Sachs CEO, you really need to be working on this. This is what their expenses need to be going to, is flying DJ Diesel out to the Bahamas, out to Coachella, to all these great places. yeah i think if you're the ceo of goldman sachs you probably ought to just stick to that i guess there's nothing wrong with having a side hobby but i would not use it maybe use your own private first use your own private jet how about that you probably have enough money get the own rent rent your own private jet what uh do you know what what his genre of dj music is i don't know there was multiple genres i think it's like i mean

you can dj different kinds of oh no he's like a dj like he's like uh yeah he's not like a he's like a edm dj i think oh so like that like that's like he's like the musician quote unquote i think it's always funny to like find out who these people are outside of their uh their daily lives i'm trying to get rid of my uh my background here since uh probably i don't even know forever i don't even know if you can do that you might have to you might oh no there you go work technology now you have the white background um yeah so dj so is it time to free dj diesel because he's getting held back here i think he should ignore his side hobby isn't it funny that he was telling everyone to come into the office like they had those really strict memos like everyone needs to

be the office at least five days a week because basically he was calling them giant wusses if they didn't and then this is what he's doing it's probably not surprised from an investment bank but i mean he did his time i'm sure yeah that's such a bad way to put it though they're like you did your time i know it's like it's like uh it's hazing hazing in college yeah or it's like yeah i've been hazed now it's my turn to haze you so yeah it's terrible culture you don't want that i mean in college who cares but in in real life um yeah you definitely don't want that all right any other news stories we had we had a couple of really good deep dives this week was there any one that and some of these aren't going to come out until uh some of these are going to come out

afterwards if you're listening to this on whatever it is sunday the what would that be 25th something like that. It is a Sunday or Monday. A lot of people listen Monday too. Of those, was there anyone... Honestly, they've all moved to my watch list, but is there anyone that's like you're kind of looking at further? Yeah. Let me preview them for anyone that doesn't listen to those shows. We had Build-A-Bear out this week, Stratbecker, young guy, really great pitch on them, super cheap. Then we had Jacob Franklin, who's an individual investor, writes at Seeking Alpha, talking Ally Financial, which is a bank that has done phenomenally well executional-wise the last decade. That'll be at the week after most likely. And then we had Rich Howe. I think

I'm getting his name right. Apologies, Rich, if that's not your name. But he does stock spinoffs. He runs a service on that. And we talked IDT, which is a really small cap startup, not startup, excuse me, conglomerate that is really good at spinning stuff and optimizing value for shareholders. To be honest, yeah, again, I liked all three. Build-A-Bear is extremely cheap and it's really interesting to see that brand coming back with the activist investors. I don't even know if I can pick. Well, here's the thing. Ally looks promising, but financials are in my no-go zone just because it's just not something I can understand and be aware of. I still think it can do extremely well and Jacob gave a great pitch. I think IDT

interests me a little bit, but their businesses that they own, well, I don't know. They have such a strong track record that he laid out. So that compels me as well. I'm definitely going to be researching them. I think both Build-A-Bear and IDT are extremely interesting. Although I will say all we really know about those companies is what we listen to in the interviews. So I'd have to do more work, but they all intrigue me. I mean, Ally's just probably outside of a sector I like to invest in.

Yeah. I'd probably agree. I'm not super familiar with perpetual spinoff companies, but it sounds like IDT's got some

value to be unlocked. I'm also I've grown less comfortable, I think, with some of the parts valuations, even though in this case, often the parts do actually get monetized and so it can be a little more valuable. I like Ally. And there's something about the actual,

like excluding the auto lending, I actually kind of like the idea of the bank. I think they have good product market fit. I think a lot of people like the bank. I don't know. I think they've got a lot of the branding right, which it's hard to be. I mean, obviously, banking is competitive, but they've done a really good job attracting deposits over the last decade. And obviously, it's slowed a little bit recently, but there is sort of that innovators – what do they call it?

the innovator's dilemma, I guess, where they just have a structural advantage and are able to offer higher interest rates than the legacy banks, just given that they have less costs associated with running it. But I was also thinking there's times that I like having a physical place to go for my bank. I've had to go in on occasion. It's rare. Yes, it's rare, but it can be helpful that time the rare time you need it it's just not profitable anymore uh because of how rare you need to do it you know and that's just going to continue to get worse and worse yeah i mean once the notary once the notary has been fully rolled out i don't need anything notarized our apartment our apartment landlords and the banks in some sort of cahoots to keep these

physical branches open because they're the only ones that seem to not be able to get into the 21st century take this cashier's check for your security deposit and deposit it at your local teller like you need to sign with this and like can i just deposit some money electronically and account for you please all right like are my the place i live now i have to i can't uh pay rent electronically it's like we're living 20 years ago whoever i know and now remember that busted SPAC latch. That was their big pitches to help solve some of that stuff. Now they obviously

over-promised. I got caught up in the hype a little bit. You didn't buy though. I didn't buy, no. I got caught up in the hype emotionally. I thought it looked promising. But that's the type of... Happened to the best of us with all SPACs. Yeah, at least I think everyone got caught

up in at least one SPAC. I think we all did. One, that's just the market opportunity there just seems so just easy pickings because the value can be improved so much just by technology that already exists. Today's episode is brought to you by our friends at Quarter. Quarter is an all-in-one investor relations app that provides frictionless access to conference calls, investor presentations, transcripts, and more. With Quarter, investors can keep up to date with all their companies

while on the move. I personally use it every earning season so that I can keep up with my portfolio companies while I'm on my commute to the office. They also just released a cool new feature that allows users to search across all transcripts. That means you could search and see how many companies mentioned terms like inflation or cost pressure or recession or even metaverse, you name it. And the best part of all, the app's 100% free and it's on both iOS and Android. So go find it on your app store by searching quarter that's q u a r t r no e that's quarter q u a r t r um here's another topic though matt commented uh he said the buyback machine allied buyback machine yeah they're buying back it sounds like an incredible amount of stock uh yeah if someone

said they're on pace to reduce share count by like 25% this year. Yeah, Matt, definitely check out the interview that'll be coming out next week. Jacob goes through it. He said basically that this year will be a bit heavier than usual, but they have, and the numbers could be changing just because of where the price is, but they have like a $10 billion market cap. And I think they've returned 3 billion in capital to shareholders this year, but that'll probably be closer to 1 billion to 2 billion in between 1 and 2 billion on a steady state basis, which, I mean, that's still great to be honest but uh not this is a little bit you know of a goalie locks period for them uh here's the one thing though how in the last two years how many times have we seen

companies announce buybacks that were just horrendously timed like they they announce a buyback and then their fundamentals deteriorate or they announce a buyback authorization and don't use it yeah there's it's just to promote the stock yeah there's the fact that a company even announces a buyback is it's not like a red flag or anything but it shows me that management maybe or at least i don't know like i think that the good teams will announce maybe a giant one or announce a perpetual one where it allows them to do as much as possible but now sometimes they want that limit on there i guess from a board of directors perspective but uh if they announce like someone announces a small one and either it's ill-timed when your stock's overpriced or

you actually don't utilize it at the right when your stock's cheap um which it probably is right now it yeah i mean that happens all the time i think on average and it's not surprising just because on average they're all you know humans as well the uh financial teams the cfo team or whatever backholders as well they know they they buy on average they buy high and sell low on their own stock the uh i mean one of our one of our companies did it and they did it in like the most promotional way i've ever seen and it really frustrated me just buy it back and be quiet about it if it's that cheap it'll show over time and you don't want to be promotional about it because a lot of show short term is like that just makes if they are promoting it like in this case one of

the leaders or board members yeah do you think we're confident about our stock question mark tweeted it out basically and then tweeted a press release of the buyback authorization. It was like, do you think we're confident about our stock? I'm like, if you were, you wouldn't have needed to tweet this. And you're a board member, so you're not even

what are you spending? I know it takes time to be a board member, but you're not. Maybe that's why is the board members they've got nothing to do all year. They just sit there and just watch their own stock. I'm on their hands yeah I'm glad I wasn't

an executive but still not great I'd love to be a board of directors like one of those board member free agents you know that's just on like oh I'm free you know I've got a lot of time I'd love to join some boards you know hop around from

place to place collect your checks I mean some of those board members that don't do anything else probably make millions of dollars a year just sitting on boards yeah you're that's it's a it's a good gig i wonder if there's a limit to how many boards you can be on yeah there was a i i bet i mean it's just a time time uh constraint but there was there's a funny from the show veep uh it was funny it was like i don't know there was a zoom call with a board member or with a board meeting and they're like not paying attention

not paying attention at all and the vote came up on something and they're like the lady goes who's on the board looks at our assistant and goes what are we supposed to vote for on this and then he's like oh you're voting whatever it was yes or no and she goes okay clicks yes and then mutes it and goes about the rest of her day all right there was a question that was kind of posted on Twitter that I thought was interesting. Do you think Amazon should buy

either Wix or Squarespace? Oh, that? I have not thought of that before. I don't think so. I think they should just partner with them and enable Buy with Prime. That's a better... That's just a better...

You know, Wix and Squarespace are good at their job which is website building i doubt amazon has that muscle memory in them or they don't have that sort of skill and it takes it's pretty hard to build up that skill they can both partner with buy with prime use amazon's best skill set which is you know logistics efficiency uh all the good stuff we know and love about amazon or hate i don't know But I think it works more symbiotically if, and especially because if they buy one of them, then they're trying to do an exclusive strategy. I don't think that works because of the market share deal. And if you're Amazon, I think you win if you do buy with Prime at Wix, Squarespace, BigCommerce, Shopify even.

And just be platform agnostic. Yeah, I think that's the smart move. I don't know. I would not. I doubt that would work out studying the website platform space. The synergies, or however you'd want to describe it, seem minimal. Yeah, I agree. interesting thought though and I think those companies that are not Shopify will benefit as Shopify

is trying to distance itself from Amazon if they can utilize Amazon's tools it just gives an advantage we've talked about this I think a few times on here already so we don't have to do a 10 minute discussion on it but the shipping is just

such a headwind for Shopify stores and if someone can get the same sort of customer efficiency, the same sort of customer value proposition as Amazon on a Wix store, on a Squarespace store, on a BigCommerce store, I mean, that's a huge advantage versus

a Shopify store. And they're not going to be able to get to that two-day delivery unless they want to... But they're investing like $100 million or $500 million, whatever it is.

Yeah, unless they decided to sell whatever $20 billion in stock at the top and then delete shareholders by 10% of that time and then spend $10 billion building out a fulfillment center, they'd probably still lose, but maybe have a better shot. I feel like it's not even necessarily establishing the geographic footprint. Obviously, that part is costly in and of itself. But actually, creating the level of efficiency that Amazon has is a tough problem to solve, I have to imagine. Oh, yeah. I mean, it's the reason that UPS and FedEx have been so durable for the last decades. Now they're in a tough spot because of Amazon, but I think it's telling that UPS has been around for so long and had minimal disruption. Maybe I'm overestimating how advanced some of these warehouses are, but they sound like pretty remarkable accomplishments.

And I've seen some of those videos, whatever, of the robots, but just running around delivering packages. But who knows? Maybe it doesn't matter that much. Maybe Shopify doesn't have to become Amazon. Maybe they don't need the shipping. If it's four or five-day business day shipping, let's say, versus Amazon, which let's assume is two-day, is it that much of an advantage? I mean, that's okay. That's okay.

But when multiple times it's been whatever the estimate and it takes two weeks, it's pretty frustrating for me. And I'm like, all right, if I get to that sort of company or not company, if I'm going back to that brand, I'm going to go to Amazon because it's two weeks shipping. And it's just, it's way more inconvenient. And the price will probably be lower on Amazon or the same. So 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

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Sign up and become a Chit Chat Money Plus subscriber today. We can't wait for you to join our community. All right. We've talked about that a lot though, so let's move to something else. And that is... YouTube's paying out money on shorts now. Now, maybe some listeners that are older don't know what YouTube shorts are. I don't think I've even watched them. I've just kind of seen

the notes there. But here's a link from an article. Like Instagram, YouTube has responded to TikTok with mimicry, which is just mimicking them. In 2020, they introduced shorts, a format for vertical videos that has increasingly promoted in the company's app. Earlier this year, YouTube disclosed that Shorts had over 1.5 billion monthly viewers and told investors that it would bring ads to the format. Now YouTube is sharing ad sales with creators similar to the standard YouTube videos. With Shorts, YouTube will only share 45% of its ad program. So 55% go to creators. Do you think this is a smart move competitively to make it a better, more attractive for

I don't know whatever you describe these short form video creators as to go to YouTube versus TikTok or Instagram who I don't think pay out that handsome of royalties well I honestly don't know

what TikTok's like I don't know what their revenue share is yeah let me see if it's in this article here, but I don't think... How do people make money on TikTok? That might be a stupid question, but how do they make money on TikTok? I think you have to do organic ads. So you don't do

ads. You don't get ads from them. I think. Don't confirm to me. I've never downloaded the app, but don't download it either. It's Chinese malware. It's true. Either way, I don't think they're... I mean, they're

a little earlier in their life cycle from monetization perspective, but I think it's a smart move. And YouTube Shorts has done really, really well. It's hard to tell. I don't have any user experience with it, but it's kind of interesting.

Do you think that the reason they've done well is because of the data advantage? I know people roll their eyes when they hear data advantage, but the data advantage Google has and the muscle memory of building a billion-dollar user

features multiple times over the last decade plus. It seems like it'd be like... I don't know. It's just not surprising that they've done so well. And it kind of... It shows, I think, again, that people may underrate

YouTube's... I mean, 95% of what teenagers use it every day. YouTube's... How am I trying to say it? Durability might be an ability to adapt easily adapt because of their advantages uh as being a part of alphabet might be underrated even compared to someone like instagram who's obviously under

you know the experience facebook brand as well yeah i mean to answer your question yeah i think they succeed because they have a lot of data but And also, I don't know, it's probably one of the most idiosyncratic businesses out there. That's kind of a hot take, though. A lot of people think it's just fatty. I spend a ridiculous amount of time on YouTube, and I always have. Maybe some people have switched to TikTok, but obviously some people have. But it still commands a whole lot of my day.

and the shorts I didn't think there was ads in the shorts no there are now there are now yeah that's only

well what'd you expect I was watching those a lot because there was no ads but now I gotta just suffer through them I don't get it

you know I bought YouTube premium or I didn't buy it there was like the free one month trial for YouTube premium because I wanted to test out the YouTube music

YouTube music is god-awful. Probably one of the worst products I've ever seen. Impossible to navigate. It just totally confirmed all my biases as a Spotify shareholder. But the YouTube premium itself, I started to realize without the ads, I kind of take the content for granted. I feel like the ads are like, you got to earn the content. You got to sit through 30 seconds of stuff you don't want to see when are you ever sitting through 30 seconds on youtube i'd never understand i never get like a double 15 second ad where it's unskippable i don't get that and also like i don't really see

the gripes people have because ad like ad loads on old tv was what you'd watch for like four minutes and on youtube what you get skippable ads but are they cut like in an hour video probably eight of them i don't see the concern like it's not like i i really don't get the no i just no i disagree i think it's been absolutely the ad load's been absolutely horrendous they i'll get i'll get 30 seconds worth of ads on like let's say a five minute video 30 seconds worth of ads at the start then i'm typically one of those people that's watching on mobile i'll skip through a lot like i'll click through just get to the point where i want to get i'll get an ad mid-roll So maybe for the two minutes worth of watching that I'm doing, I'm getting 45 seconds worth of ads.

I never get 30 seconds of ads. I don't know. I don't know what I'm lucky, I guess. I mean, you don't get like the one of two and it's like two 15 second ads. They're always skippable if it's that. So I never, yeah. I mean, it's, I think I know what you're describing, but I think it's rare. I really have no interest in subscribing to YouTube premium, but maybe it's nice to have the option. Some people really do not like the ad load. YouTube TV, though, is quite nice.

I spend a decent amount of time on there. I was also surprised to learn how much time is still spent on TVs. I don't know if you remember Zuckerberg talking about that on the Joe Rogan interview. It kind of makes sense to me.

Why are you surprised? Just because mobile has become so dominant. people spend so much time on their phones it kind of shocks me that people still watch a lot of TV however I think a lot more so now

it's background it's just the most passive experience watching something on the TV that's how it's always been it's just background a lot of older households it's on in the evening is background that's how it goes

I don't think that's changed I see a lot of situations where people are on the phone while the tv's going so maybe we're double dipping you're double dipping yeah that's why like 50 hours of screen time in a day yeah maybe there is that all right uh new topic i don't really have much any anything else on your end um no i mean stocks are down and so I guess here's something worth kind of chewing on. I see a lot of people, I'm kind of at this torn point right now

where I see a lot of, I don't want to say like my contras, but- Yeah, I hate that. That's all, it's too mean when people do that. Yeah. Some of the investors that I don't model after, I guess, like some of the people who don't try to replicate their process,

I see a lot of them. Yeah. Kind of with just this very simple, the stock is down. I like the business. I'm going to buy more. And it makes me reluctant to do so with my own holdings, considering, but they continue to drop. Is buying the dip too simple of a strategy or is it the right strategy? Yeah, I think. you could be like more sophisticated term on it that you're getting you know i feel like you're on a full present value but yeah like i feel like you're on a full circle where uh at the start you're like stocks down i like this business blah blah blah you probably you know you're you're kind of a novice and you're like i'm gonna buy and you kind of learn more

stuff and you're like i need a differentiated view i need you know what's the whatever like the stock's down for a reason the market's telling me something and then full circle you go But nope, you come back and you're like, after, I don't know, years and years, you're like, well, all of the other stuff we talk about is kind of BS. It's not really worth it to discuss. And at the end of the day, do I like the business? You probably know a little more like, okay, yeah, we think that the company is going to generate a lot of cash or whatever. It's undervalued for X reason. And it's cheaper than when we bought it.

we have cash let's buy i don't care what the hell anyone else is doing it's just a really sophisticated way of saying that you know we're you buy the dip yeah i mean it's more than that though because you could say buy the dip on tesla right now when it goes from a 900 billion dollar market cap to an 800 billion dollar market cap people say that and they are wrong and they will So, I mean, okay. I think they're wrong. They might not be. I should rephrase that.

But it's not that much more complicated than that. And I don't... Look, looking at what other people are doing, I think is... Not that helpful. No, it's never. Well, okay. Unless someone really smart is buying the same stock as me,

then I was brilliant. Yeah, that could be confirmation bias. It could be fun confirmation bias when you find out an investor you respect bought the same stock as you at the same time. But if you're looking at what someone is buying and indicating your sentiment or strategy or something like that, I just feel like that's just nonsense. It's going to be unhelpful for you. it's actually going to be probably pretty negative because you're not focusing on what's best for you. You're thinking of other people

and they could be in totally different situations. And it's just not. Investing is really, at least for a personal account, an individual endeavor. If you're in a professional setting, it's for the group of people you're investing with. The, I think we've gotten past the point now in what I'm seeing out of kind of just the, the investing ether, the, I'm seeing less of it's down blank percent from its highs. I have seen less of that. Yeah.

I think from about, from down for anywhere between like down 30 to 40% and 70 to 80%, people reference that nonstop. After you get past down 80%, it's more, I don't think this business is going bankrupt, so it's a buy? Yeah. The most dangerous thing that ever happened was Amazon succeeding after going down 97% a little bit. I think that has sabotaged so many investors in the following years. It's generated a trillion dollars in value for shareholders since then. But how much has it lost from people referencing that as an N equals one scenario? yeah I mean what's the cliche I bet a lot of people listening to this

have heard that this stat before but what's a stock that goes from down 80% to down 90% it's at down 80% and then it gets cut in half again so if something is down 80% it is down

it's down like when you first think of it you're like 80% okay fine like you don't think it's actually much larger than you think. And then if something's down 90%, it's basically a zero. I mean,

like, you need... If a stock's down 90%, you have to what? Have 900% returns to get break-evens? Assuming you bought it, whatever.

Which is even... You need a 10-bag. Yeah. Like, I did that... Okay, I'm doing it right now and it's...

Yeah, I think it's a mistake. You need a 10-bagger. The old price doesn't matter. Yeah, the cost basis should not matter anymore um like we're just going we're just going through all the good returns yeah yeah i know who cares if it's a 10 bag or if it gets back up to where it is or i saw that i saw that i know that people use the term mom and pop as pretty like i don't

want to say they say that like in a high and mighty way they're like oh mom and pop is giving up but they are giving up right now according to the data and it's just like what do you mean mom and pops giving up uh the data there was some data coming out today about uh like the average investor kind of thing or what yeah individual investor is mom and pop the the the same sort of i don't know how they run the numbers i don't have the survey but basically account closures or inactive accounts or whatever are at the same levels as the 2000 bear market and the 2009 bear market um could get worse doesn't mean that once we hit that level it's gonna get better it could get worse but i think that's a i don't know interesting data point not necessarily like

because like we talked about it doesn't mean i'm like oh mom and pop gave up i'm gonna buy right now but i think it's interesting that whether you learn market history or not the the like even if so many people know about market history and the tendencies that people make and they had the data from you know where it was a mistake to give up if you're a mom and pop investor in 2009 and 2002 but they're still doing it you know what i think is kind of an iron like sort of uh i want to call it poetic justice but it's ironic that So I've grown to appreciate the wealth effect a little more and the impact that it can have on spending, which at first... Anecdotes or just kind of thinking about it?

Just thinking about how tight people are with discretionary spending when their portfolio comes down a bit or down 50%. You know, suddenly you're probably a little less spendy. And this might be like a roundabout way of saying it, but there was a part of me that experienced a little bit of schadenfreude when people lost money on crypto. You know, it was kind of like, you know, hopefully they're learning their lesson situation. However, if the crypto losses created a reduction in consumer spending because of the wealth effect that impacted my stocks, I think it's almost in a sense point of justice because the schadenfreude I felt for them losing money actually kind of reverses and I lose money because of it. Yeah. Well, if the CEOs are buying back, then in the long run, you are making money. but that you know just got to extend that time horizon yeah but like we said like we said there is that rare company executive team that is actually good at buying back their own shares

and if you find them hold on what's the best buyback company of all time probably autozone probably autozone yeah or uh actually scratch that autozone's great but there is The Outsider's book. Who was it? Teledyne. Starts with a T. Yeah. Starts with a T.

They were really good at using their stock and then they bought back 90%. What's his name? Who's the guy who's running it that's kind of a legend? Yeah, I don't know. I forget his name. I'm going to look it up.

The bummer is you cannot have that good of a business in order to be good at buying back. Because if you have too good of a business, I think people will value you too highly. Your buyback will be less accretive. So you could have a really good management team, but if the business is too good,

the buyback will never be quite as accretive. Yeah, and if it's such a durable one, Coca-Cola comes to mind there, where it's probably better actually that they pay out dividends. Singleton, Henry Singleton. Oh yeah, Singleton. All right, here's a headline for you.

Is this the fastest sell signal you could ever see? I don't even know what this news website is. Beyond Meat COO arrested for biting man's nose near Arkansas Razorback Stadium. Now that's ironic because of the fake meat company but

how easy of a sell signal is that when an executive team member that you are supposedly trusting is should be in a psychiatric ward. yeah and i saw that picture of him and i i mean i think pretty much any executive with a mugshot

probably not gonna look great but i think a mugshot is like the least uh well yeah that horrible yeah yeah yeah i mean i was looking at that thinking like how could anybody believe in this executive um do they have net right now they have i think it was a timing thing but they had negative gross margins and declining revenues right now it's not negative it's not a decline it's i don't think it's that much of like a timing thing i've been kind of following them on the earnings reports and that business is i don't want to say completely screwed because i might be eating my words eventually here you're gonna be in your bugs eventually here uh sorry i mean they are they're having to discount the shit out of all their products just to sell

through yeah they're saying that consumers are trading down in proteins because of the recession that they're going back to meat meat prices are up so much i know i thought they were supposed to be more insulated yeah i know it's ridiculous i don't know this is a little hard to read um we do have a comment asking about ic huge discount to that asset value uh i don't know That is a good question. We did a write-up on them. I know there's plenty of write-ups out there. A lot of them are buying a paywall, though. We have a free one on our website. I would say check that out. It's not super comprehensive, but it's a holding of ours right now, so definitely go check that out. We wrote that up at a higher price, so yeah, I would definitely check that out. We have had this argument or debate, healthy debate, before around the operating businesses. I'm personally not in love with some of those operating businesses that they have, but you seem to be a little more optimistic about it. So if you were just buying those operating businesses, and for any listeners that aren't familiar with IEC, they've also got some equity stakes in other businesses that are certainly worth a lot of money.

MGM's the largest, but- It's hard to go through everything in an audio format. So just look it up yourself. There's a lot of different- Well, it's hard because they're not at a certain- What price would you be willing to pay purely for the operating businesses? The operating businesses?

That's tough. So you basically have, you have search, which is probably worth like four times earnings, probably value at that about, let's be conservative, $350 million. That's kind of this really, really old tech business

that they're running for cash that'll probably be gone in a couple of years. say $350 million dot dash Meredith. I kind of want to run them off of a sales multiple because I know what margins they said they can get

to. Gosh, I don't have their revenue numbers in front of me though. I think, so they said they can get to a 30% margin, adjusted EBITDA margin on that. Now, I would probably discount that because of the adjusted EBITDA margin while probably healthy from your revenue to cash flow, They also don't have their corporate overhead expenses there, which can make their individual businesses look a little bit better.

So maybe they can get a 20% true earnings margin on dot dash Meredith. And gosh, what's their revenue number? I don't have it in front of me. I don't know. Let's say it's three. I think it's three billion, three billion, something like that with the combined number. i think look i think they can get to probably about the reason i'm saying about three billion and then the 20 margin is a kind of is a roundabout way of saying they can get to probably

500 million dollars in earnings within a couple of years i'd probably value that i think 12 times earnings is fair given the businesses and the historical growth rates and the durability of the brands, People Magazine, Better Home and Gardens, Investopedia, been fairly durable businesses. Investopedia, a little less... It's a little newer of a company than People Magazine,

but still. And what would that be? $500 times $12. $6 billion market cap. So then you have Care.com and a lot of the startups. I don't know what to value those at. Let's say...

why don't we just add on and say about seven and a half bit for the operating businesses? There you have it folks. That is the, but that was all I could be forgetting something there. Cause I have none of my notes in front of me. And also it could be wrong because the numbers look pretty bad right now. So that's the reason the stock's down.

All right. Well, hopefully that helps. I guess he's asking, he's asking why do you think it trades? Oh, such a discount. I guess I didn't read that.

Why? Oh, that's why. I think I just answered it. The numbers in their biggest operating business look bad. Yeah. They look really bad right now.

And they kind of said they would. They're ripping out the bandaid of these old infrastructure, tech infrastructure on stuff like People Magazine's website. And they're saying they're going to get better ad loads and go through this whole model

and stuff like that. But they kind of hit a double whammy with advertising on cpg spending which they were pretty exposed to hurting really bad in the summer so it makes the numbers look really bad they said they're going to recover but right now investors do not like what invest you know they do not like executive teams that are saying look the numbers don't look that good right now but a year from now two years from now it's going to be fine they hate those businesses and they they you know people are going kind of to what do they call that the flight to safety, which from my point of view, not specifically talking IAC, but that kind of

tells me, and I know we talked about not looking at other people's sentiment and having that drive in your investing decisions. But if a lot of the companies where they're not earning right now, but they had promising unit economics, or there's something hurting them this quarter or the next few quarters, that's going to make the numbers look worse than they actually are. And that's driving the stock to fall 60%, 70%. I mean, that could be a fantastic buying opportunity if you believe in the long-term thesis. Yeah. Long story short, not a lot of love for the operating businesses. So that's probably why kind of trades like Descatch and Nav. What do you think about Callaway officially changing its name and ticker? It used to be

E-L-Y, as in, I believe it was the guy that founded it's last name was Eli, if I'm not mistaken. Or his last name was Calloway, and that was his first name. Yeah, I think Calloway. Wasn't his last name Calloway? Let's confirm, but you go ahead and keep going there. Anyway, they changed their ticker now to ModG, M-O-D-G. And I'll be honest, I had no idea what that was for the longest time. I thought, man, that's a really ugly ticker, Modge.

and they've officially changed their name to Topgolf Callaway Brands Corp or something like that. Topgolf Callaway Brands Corp but Mod G stands for Modern Golf if I had to guess.

Yeah, I think you're right there. Should that drive some multiple expansions? I know. How about we just don't focus on the names because no one's going to go to Topgolf now because you changed your name on your corporate? You know, what's the best performing stock of all time?

We all know it. Berkshire Hathaway has nothing to do with the companies that underwrite it. I think it's not a red flag or anything, but if you're focusing on your tickers and your company name. I'm going to expand that multiple somehow. I hope. I'd be a legacy company when you can be modern golf. That is, I mean, that alone should drive some investor sentiment.

Do you know what the other thing is? They have Angry Birds. They even do a very good job. We just covered Roviat. we're covering Rovio this week. So, and that's the maker of angry birds. They got angry birds at top golf.

So that's, have you played angry birds or top golf? Angry birds at top golf. No, I've rarely been to top golf, unfortunately. Sorry for the shareholders. Uh,

but here's the equalizer. Yeah, it's a, it's an equalizer among the bad and good golfers because you don't have to have a very good shot to knock the pigs off their pedestals or whatever. So, uh, I,

I was pretty good. at that part. That was probably my favorite game. If I was a shareholder of Callaway, I would be hoping that they did not spend on consulting fees for this

name change and ticker change. Let's give McKinsey... They need some help. Let's give them a million dollars for some Adderall-ed out 24-year-olds and they can come up with a presentation about why we should change our ticker to Modge.

and how it'll help with shareholder value it's an ugly ticker it is an ugly ticker did they even do a press release about it because i was not sure what the hell it was yeah i just saw it one day i was like what is this company on my watch list it is pretty bad i don't know what i don't know what's bad about it but it's bad that's i i don't know eli was a great ticker and i checked it that it was Eli Calloway was his name. Maybe a little bit. Some press releases.

Where are we? Yeah. That would be funny if someone just changed other people change the tickers to the companies to the CEOs or founders name

like Buffett B-U-F-F could be Buff. Or that'd be quite the late change for Buffett. I would not see that coming. Yeah.

They did have a press release. They had And Callaway Golf Company announces plans for new corporate name, all caps, Topgolf Callaway Brands Corp. If they spent money on a consulting fee on this, I would actually, that's a huge, I'm not joking, that's a sell signal. Company to change ticker to MODG, reflecting its leadership in the much larger, more dynamic, and inclusive modern golf ecosystem.

Great. Sell more clubs, get those comp sales up, and investors will be happy. Yeah, or just top golf comp sales. Yeah, I mean, we're catalyzing shareholder value. Yeah, I don't know. That's just, it's just all fluff. It's like we were watching, and spoiler,

we don't want to spoil the Rovio Entertainment show that we're going to be doing, but I was watching their Capital Markets Day, which is just, I guess, an investor day. And they were talking about all the things they're going to do they even brought out their sustainability officer, their $400 million company. And they have a head of PR there in this big auditorium. And they're like, look, we're doing great. We have all these things going. And then after that, I went through the numbers because I run

the chart. I do the charts and plug it in the data on the Excel sheet. And they haven't grown in five years. And I was like, look, if we stop with this auditorium, if we stop with the sustainability officer at a 400 million dollar company uh you know maybe you take the head of pr take her salary hire some more developers maybe we could drive some top line growth here but um look like you can talk i don't know it's just kind of that cowboy thing reminded me of how companies just love talking a big game about their strategy and so many it's all fluff and they actually fail to execute yeah i i mean definitely breezed right past the sustainability slides um all right i'm seeing something right now that's interesting so shopify is

back to where it was at like 2019 the stock vindication we were finally right most of their executives continue to sell the stock yeah i kind of see that you know i can see why people think that's a a down like a negative but a lot isn't that a lot of it like i know there's the big thing with elon's one month 10 whatever those things are 10 b1 plans the pre-trading plans where he did only a month before and it was right at the top of tesla i mean I can see why people are upset with that. But most of those are like a year in advance. So I would check those four and fours on the SEC filings

because a lot of times it's just for selling because they decided to sell a year ago. They just had to plan it in advance because of SEC rules. Can you not call off those sales though? Like if you thought the start was undervalued? I am unsure about that one. Yeah. Okay.

other news we got like four minutes the FTC the Federal Trade Commission is taking aim at gig companies the gig economy

basically they're saying that the algorithm algorithms are not transparent enough what is a gig economy company for the listeners well they are

for example it's like Uber or DoorDash or Lyft basically you're paying your And I don't want to say the word employees. You're paying your independent contractors on what is a per gig basis. Essentially, it's variable compensation for completing gigs as opposed to paying them a fixed salary.

um but anyway the i wanted to make sure i pull this up yeah so in the press release they said protecting these workers from unfair deceptive and anti-competitive practices is a priority and the ftc will use its full authority to do so it sounds like because there's all the red there was already the California state policy or action that they tried to take place to classify these workers as employees as instead of independent contractors. Now it seems to be the federal government taking aim at it. Are you in favor of that? Oh, that's a difficult question. I don't know. That's a tough,

that's a tough question. I have better, I think I have more conviction on an other take, which is that this type of risk makes the stocks in the economy absolutely unownable because it can have just terrible risk for their margin. Second, now this might be some upside for the economy companies, is this feels a bit like Groundhog Day, where you could have been reading that headline. That could have been from 2017, 2018, 2019, 2020, and 2021. I mean, I've heard this stuff for years. Nothing has really materialized. so i would doubt it's going to materialize again but i still think the risk is there like i think my biggest pet peeve with it is just that there's such a lack of transparency around what drivers get as a percentage of like like what is the company taking versus what are you taking it's not fixed all the time there's different bonuses that are set in that use like these different algorithms and there's no transparency so they have but they're pretty much

in the dark on this yeah i know and it's fine if consumers are in the dark because that's kind of what you're paying for is that you know at new year's eve it's going to be more expensive but for the drivers it that i would be very upset if i was a driver and i would love to know i would you know tell me i'm your worker tell me what what my cut is i'm a little torn because i know it provides people maybe jobs that otherwise wouldn't be able to work yeah that's why i had no good take on it yeah yeah it provides some flexibility but i met an uber driver the other day who is borrowing the car from uber so uber buys the car you're driving you're riding ubers with stocks at these prices come on we gotta be saving money we gotta be this was like this is like three

weeks ago this is before that but the uh i know we're running out of time here so they she basically leases the car from the company pays i think it's 1500 a month to uber to have the car and then she has to drive essentially to meet that 1500 quota she's barely squeaking out enough money to like live on this and i'm sure there's a lot of drivers that are in the same boat yeah Yeah, well, Uber's got to make margin. Come on. All right, we got to support. You know, they're having a tough time as well.

If that's how Uber makes margin, then... Well, here's an idea. Fire some people. Yeah, fire some people. Fire the 30,000 employees you have, which is ridiculous. I know. Didn't we look at them for not...

Yeah, we looked at them for not... Maybe that's why they don't want to classify them as employees. They already have too many. Yeah, I know. It's so bad. All right, but that's going to have to do it. It's 101. We went a little late, but I think it is fine.

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