Chit Chat Stocks - Kyler Hasson | Google & Charter Communications

Episode Date: January 26, 2021

This week on Chit Chat Money we are joined by Kyler Hasson. You can find his work at concentratedcompounding.com or follow him on Twitter, link below. Before the discussion, Ryan and Brett share their favorite stories from the week. Below our links, you can find the timestamps for this week's episode. As always enjoy the show! Follow Kyler Hasson on Twitter: https://twitter.com/kylerhasson?s=20 Subscribe to 7 Investing with the code "CCM": https://7investing.com/subscribe/ Subscribe on YouTube: https://www.youtube.com/c/ChitChatMoney Follow Chit Chat Money on Twitter: https://twitter.com/chitchatmoney Visit our website to see more from your hosts Ryan and Brett: https://www.chitchatmoney.com Timestamps Stories | (2:19) Fintwit | (22:12) Interview | (24:40) Hot Water | (1:34:51) Buy-Sell-Hold | (1:42:03) Anecdotal Evidence | (1:44:39) Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. Today is Tuesday, January 26th. Today we have an interview with Kyler Hassan. I think I'm saying that right. Yeah, it's either Hassan or Hassan. Yeah, I think it's Hassan, but it was a good interview. Talked about a lot of good stuff, some of his holdings, how he sort of manages his money, and then what he looks for in businesses. And then we also dove into charter communications and Google, which were two interesting businesses. But before we get to that, we have our stories for the week. What is your story titled? So this is the one that everyone has been talking about.

It's been the big story the past week. It's the long, short battle for GameStop and WallStreetBets, you know, getting the limelight. Okay. And I have Are We in a Bubble? Someone wrote a good blog piece on it, just kind of interesting stuff. Brooklyn Investor, right? Yeah. It's an anonymous person, but it seems like we hadn't really seen him before, but he has a lot of respect within the investment community.

Yeah. So I'll dive into that. But before we get to the show, sales pitch time. I feel like we're kind of becoming a little too salesy. We'll keep it quick. Seven investing. What analysts do we want to talk about? Max.

Let's do Max, yeah. Max, yeah. I mean, if you're into biotech, anything sort of biotechnology, stuff like that. He's your guy. It's early stage stuff. He knows how to navigate those markets correctly without taking on too much risk. He's also a good investor to supplement that. Yeah, to good investor in general.

He doesn't stick just to biotech, but that's his expertise. And if you want all of his analysis, you get $10 off with our code CCM at checkout. I think it's like a 66% discount, something like that. So you're welcome. We do it for you guys. Yeah, it helps us out a bit too, but it also, you know, you get a great service out of it. And then we also have, as always, current state of FinTwit, hot water, buy, sell, hold, and anecdotal evidence. Let's go.

Welcome to Chit Chat Money. On this show, host Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investment. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are not financial advisors. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or a recommendation. Now, please enjoy this episode. okay welcome in i'm gonna kick things off with are we in a bubble uh so very original yeah uh i came across a new blog piece this week called the brooklyn investor well that's what the whole blog is called uh and he had a pretty long piece about just his overall thoughts on the market and

i i really didn't know who this guy was but he got the vote of confidence a vote of confidence from Ensemble who retweeted it. And a few others, yeah. Yeah, so I decided to take a look at it. And he covers a few things in the article. And this is kind of bland, so feel free to – this is just kind of typical bubble talk that everyone's talking about right now. But he talked about Howard Marks' commentary on the market currently.

And then he went through a whole bunch of different stuff. But the bulk of his discussion around Howard's comments were about how the difference between growth and value could be because industries are going obsolete. Um, and maybe that's like, uh, you know, maybe that is, uh, the, that the difference is warranted. Yeah. I mean, okay. Well, the big, uh, it's interesting.

So you look at the value names, I feel like I don't look at what's in the Russell value or the small cap value or whatever it is, um, what's specifically in those. But from what I hear other people talking about, you know, the main things that are in there are energy, uh, financials and manufacturing. I think a lot of times in the United States, the manufacturing sector may be in secular decline or has been for a long time. And that could be a reason. And there's other businesses that have been disrupted, you know, like legacy media, stuff like that. But with energy, I think part of that may just be because they're out of favor.

Because when you look at the energy usage across the country, it's not like that's going away. And there is that slow transition to renewables. But it's not as fast as some people think. I think I've seen numbers that energy stocks or something like that, ex-renewables, are only like 2% of the market currently, and they're a way higher part of the actual economy. So I don't know if that makes sense there. And then on financials, there has been a lot of disruption

within traditional banks and stuff. But again, those aren't going away. They may be going away slowly. Yeah, but stall speed is just as bad. Yeah. Yeah, so I think parts of it, I think you might be correct there, but some of it, I don't think a lot of these industries are done. They just might be a little bit smaller.

And this is how the value factor kind of works, at least from historical evidence, where people discount these industries too much, and then there's a valuation re-rating, even though the earnings are declining. Okay, and I believe Howard Marks also talked about that some of these businesses, you're seeing these massive valuations on them

and these premiums when you look historically at them. But he said they deserve them. I mean, if you're looking at a company that has 30%, 40% operating margins, I think they do deserve them. Yeah, are you talking about sales ratios, stuff like that, or just the earnings ratio? Yeah, I guess, because it's like twice as profitable.

I mean, it deserves twice the sales ratio. That's why the sales ratio in general, that type of stuff can be misleading. Now, can margins grow forever? No, because at some point, you know, labor is going to come back and say, like, no, we want a higher piece of that pie. But if margins are expanding, at least in the overall economy or in many parts, then those sales ratios make sense. But there's stuff about, like, the Shiller PE and stuff, which is a little bit above our pay grade, right? But I don't know.

What parts was Mark saying was in a bubble and not? Because he said Fang. Howard Marks? Yeah, or was it this Brooklyn investment? This is more Brooklyn's commentary on Howard Marks' stuff. Basically Howard Marks was saying like maybe it's not as bubbly as people think because it feels like everyone is saying, all right, we've pushed the snowball too far and there's going to be some sort of mean reversion. But then he also talks about Shiller and the interest rate adjustments and sort of how that warrants the current valuation. And yes, a lot of this stuff is probably over my head.

But he says if we adjust long-term interest rates back to 4% from slightly over 1% right now, markets could be fairly valued at 25 times earnings. Yeah. Yeah, like I said, this is over our pay grade. But I just – I really don't understand and I'm pretty sure there's historical evidence that interest rates don't have a long-term impact on earnings yields. So I just don't, if you're looking at a business on an individual basis, not like factors, some of these companies aren't going to be able to return that much earnings to their shareholders to warrant the valuations, regardless of what interest rates are at.

Yeah, I mean, some of them, yeah, and this is X, a lot of the FANG names, which it's tough to group those together anyways because why isn't Microsoft in there or something like that? But what companies are you referring to in that regard? Probably my software businesses, I guess. So like the SaaS names, SPAC, EV companies. Those are just different, I guess. That's a whole separate, like that's an obvious bubble.

But I think the big thing is, you know, there's a lot of renewable companies that are getting a super high multiple. There's a lot of, yeah, the SaaS names. Those ones are probably the ones that, I mean, even though they're gross margins, whatever, we've had this discussion before. um they're so high and whatever and they're like oh yeah i mean if they're trading at 20x sales it's a different market environment you know we're in a new paradigm with these business models but i think what he means by interest rates is just the market as a whole so that's kind of different like if you're going at it from an individual perspective like what i mean by individual it's individual company and i think he mentions like don't own pets.com during a bubble just own

Berkshire Hathaway or whatever in 2000. That doesn't really matter to you. But if you're someone that's investing in the broad market, it kind of sets your expectations where interest rates are. Because if the interest rates rise, that means that you can search for better yield than in the stock market in bonds, if that makes sense. Yeah. Yeah. Okay. That makes sense. And then he goes on and talks about rent tech as well. And I think another one he covered is, But I'm not going to get into all of it. And then at the end, he basically asks himself, are we in a bubble? And he says there's a bunch of tiny little anecdotes, tiny little micro bubbles that seem frothy.

But on the whole, he does not think we are. Like SPACs, right? He talks about SPACs, some of the IPOs popping, and then stuff like GameStop. Yeah. ANC or Bankrupt when it did or whatever. Kodak, yeah. Here's some long quote that he has. he says speaking of japan the japanese stock market hasn't yet recovered uh it's 1989 high

in that kind of bubble yes i would worry about owning stocks but remember p ratios back then were 60 to 80 times for the whole market that's too expensive to grow earnings into in a decade or even two not to mention the government spending the first two decades preventing any restructuring etc that would help the market recover it was all about protecting defending the status quo Things seem to be changing slowly recently, though. So if we see that here, that kind of insane price to earnings, then yes, even I would start pounding the table to dump stocks regardless of interest rates. But I don't see that.

In some places, yes, valuations are silly, but who cares? If you owned, say, Berkshire Hathaway in 1999, who cares what the market valued Pets.com at? Just don't buy Pets.com. Do you think these micro bubbles that we're seeing popping up, and this is the day, we're recording this the day that GameStop is up like 140%. Yeah, we'll be talking about that next. Do you think they have any bearings on most investors or the market as a whole?

That's a tough question, but I don't, okay, it could hurt the voting, whatever, the voting machine versus the weighing machine thing, where, say, some of these companies, a company I'm not allowed to talk about for the next month, or other assets and stuff like that, if they totally crash because their valuations are unjustified, then it could bring down the market in the short run, right? You know, whatever, you know, every year, there's typically a 10% drawdown. And every few years, there's a 20% drawdown that could definitely occur. But I would just think unless there's some terrible thing going on that it's just a better buying opportunity for the names like he's mentioning here, Berkshire Hathaway or something like that,

you know, in that 1999 2000 bubble, which was definitely worse than it is right now, it could get as bad. It could become, you know, part of a broader market bubble, like it was back then. But if you just own the companies that you believe were training at a reasonable valuation, had great returns on invested capital, were generating cash, returning capital to shareholders, I don't think you have to worry about that.

You just can't get the FOMO to go after something like GameStop. Yeah. Yeah, I agree. I agree with all that. And then, I mean, sometimes it does lead to overvaluations and some other names as well. Yeah. But there was also another ensemble piece by Todd Wenning, who talked about even the really, really high-quality companies, if you thought you overpaid, you didn't overpay.

Like Costco, Walmart, you could have bought Costco at 40 times earnings apparently any period and still have like a 10% CAGR. Yeah, any period like whatever, over five years ago or something like that. Yeah, I mean if you find the quality companies now, the hardest thing to judge is for something like Costco, you always worry about, all right, well how much more can they reinvest? and that's the hardest question

you have to ask yourself but yes it can pay to overpay if that makes sense sometimes but I think when you look maybe not

yeah there's a lot of I feel like there's a lot more times where you overpay and you're wrong what's that you're referring to it's like gosh the quality margin of safety

no no it's like when something like you know we see the Costco's and the Amazon's and the Netflix's that have been good performers, but it's kind of like we see those just because they lasted,

but there's a lot of companies that died in their wake. I'd love to see the numbers on that. Maybe it's not something you can actually look at statistically. Okay, your story. This one's fun. We all have been following it, I think. Everyone's been following it. If you're on Twitter, I mean, that's all anyone on FinTwit's tweeting about,

but it's the battle between GameStop, and it's between the short sellers and WallStreetBets. So it's been the most followed stock this week And it became a battleground stock After Citron Research The really big short seller First off, they were trying to do this at first During the inauguration

Which was ridiculously dumb But they were publicly announced that they were shorting The company GameStop It had a high amount of short interest I think it's at over 100% still And so on January 19th About a week ago they tweeted it was time to short GameStop

Five days later The stock is over 200%, so it did not work well for them and for the other short sellers. And why did this happen? Because the degenerates, as they call themselves, over at WallStreetBets decided to gang up and flood the GameStop options and common stock market. So they're buying up shares like crazy, buying a bunch of options, and they're driving up for the demand for shares in this heavily short stock, which caused a crazy short squeeze. and if you don't know

what Wall Street Bets is I think we had an interview with the founder of him or of that company Jamie Rogozinski Jamie Rogozinski yeah a very interesting guy

and yeah we talked with him back in the spring so you can understand what they're trying to do over there and it's really a community of people taking

crazy bets that's why they call it Wall Street Bets and they bet on things that could hopefully potentially have some sort of GameStop like returns

here's the thing I like about Wall Street Bets is they are degenerate gamblers and they advertise themselves as such. They're not fooling themselves. They're a very honest crowd. Yeah, I would never invest like that and no one should invest like that but if this is your type of gambling mentality

and I know there's people on there like It is hilarious to watch. I mean there's, you know, poor Citron but, and there is a lot of there is a lot of tail risk or negatives to what goes on. It's funny to watch from the sidelines. Yeah, I don't like when people are putting their entire portfolio into things like this.

But I'm rooting for them to make money. I don't want them to go broke, and I have a bunch of loans to pay off. But, yeah, the stock now is up. Well, the trading today has been erratic, as everyone knows. We're recording it on the day. It went up to $150, back down to $70, and up to wherever it is now. But it's up about 2,500% in the last year, maybe $2,000 now or even lower. But it has made value investors quite a bit of money, including Michael Berry.

although he did sell I was looking at his 13F he sold about 40% of his stake back in September his last 13F so we'll see how much he still owns I'd assume that a lot of the value investors who are actually investing in this

to have it as a long term deep value play kind of like we talked about it with Nick Seipel actually recently I think a lot of people are probably taking their chips off the table because this has just been ridiculous even if they can do a turnaround story.

What did you think about that? Originally the thesis was at one point they traded below their net cash. Literally. It was a real deep value play. The thesis was that they were going to cover their dividend which at the time was like 18 or 19% yield. Now the thesis is it only goes up.

I'm sure a lot of those value investors that got in for the right reasons are out now. Yeah, I mean, it's always worrying if a company like that becomes so erratic or a stock becomes, like, you know, so erratic and so volatile. But, yeah, I mean, I'm guessing they use the high-demanded buying shares to end up selling it. But the short interest, I'd be wondering to see what it ends up at in the next few weeks because it still looks like it's at 100%.

Maybe that will get updated sometime soon. Let's see, I have a couple questions that we could discuss. do you think this is the last hurrah for wall street bets no uh i think they're toast though it's like some point like you know what i mean they've kind of yeah i mean the it is the last hurrah potentially before they're regulated yeah or there's some sort of action against them but it's not like if they were unregulated and they kept going no this is not the last win or victory they're going to have. The thing that I find so funny about this is they're like,

let's get them, let's attack the short sellers, let's do it. It's a coordinated attack. And then at some point, all of them backstab and drop out. I mean, yeah, it is a confidence game. And then, I mean, on aggregate, no one's making any money because you're losing a lot of it to trading costs or whatever, you know, order flow and things like that. So some people are getting really rich and some people are getting screwed

and eventually someone has to hold the bag. but do you think now we don't have the legal expertise but just kind of in general do you think this is a collusion pump and dump schemes in like other words do you think it should be deemed illegal uh i mean yeah if these if these people were in an office together yeah it would have already been rated uh you know like everyone would say this is terrible but because they're you know on the internet just because they're not together doesn't mean they're not coordinating the same attack oh yeah i mean i saw it's not even groupthink anymore no it is collusion it's not like they're i mean okay the first people that got into gamestop yeah there's a lot of people

that in the light in the spring in the winter and last year were saying like this is a deep value play we think this has a you know high risk but high reward for potential just betting on the company. But now there's a weaponizing options contracts to try to screw over a heavily shorted stock. And if you do that on your own, maybe that's fine. But if you're colluding with thousands and thousands of other people, I mean, it's not great. I have a tweet from Jesse Livermore, who is an anonymous account who goes by the pseudonym Jesse Livermore, if you're not on Twitter. But he says, SEC needs to drop a bomb on this, which would be exciting. I hope no one gets hurt. But imagine if the scenario were inverted and short sellers were using an online form to advertise

and attract participants in an option-driven attack that sunk a stock by 90 people like if you flip it you know it's always nice to be on the long side of this that's great but yeah if you flip it and there's people at like a firm that are taking stock options like honest working employees and you just bombed their retirement, it's a little... But the thing is, what makes it worse? Just because a stock goes up versus it goes down? I think they should be treated fairly. It seems to be a bias, and yeah, we're long-only people,

so we don't necessarily care, and it doesn't affect you if you're long because you don't have to pay interest on your short loans or whatever. But it should be treated the same, right? Yeah. I mean, it feels wrong. but this was going to be my current state of FinTwit, so I have some follow-up questions for you. First of all, who do you think they'll attack next?

Oh, I mean, BlackBerry, yeah. BlackBerry's being attacked. AMC, I'm hoping Altria. They were joking. Look at the companies in terminal decline. Yeah, people were talking to Lawrence Hamtel, our friend who was on the show, that yeah

he should go in and pretend that you know as an anonymous account and just drop the seed this terrible stock yeah drop the seed

this dividend yield's high but it's not it's probably not short enough and it's too big the only last question I had well what would you think

if you owned a company and Wall Street Bets started you know doing their thing with it which way doesn't matter because if you're long you know

if you have the way we you know the way we invest like with the whatever the five year time horizon time horizon some forever um i don't know time time horizon eliminates all that yeah think i think about it

like uh if you're if you're long if you're long um yeah if it could hit it could go up 150 percent it could drop 70 percent from there but in the next six seven five six seven years it's going to follow its earnings so it doesn't matter yeah the thing that the only hard part is that when When you say you own something and you have the benefit of it going up 100% right away, that can be a good thing, but it makes you make the hard decision of, should I sell? I guess sometimes that's why not forcing yourself to sell can be a good thing. Okay. What would you do if you were management at GameStop? Maybe try to raise some money.

I don't know. Just add the money equity offerings? Yeah. I don't know. I mean, whatever you can do to raise money with this elevated stock, right? you know what would be interesting that Chewy.com guy that was on the board

what if he what if we find out that he was he was yeah because we don't know who any of these Wall Street Bets people are

and Reddit does they have emails and whatever you know yeah it would be interesting to see when they get the SEC gets a subpoena

who was actually who are these accounts because that's going to become public information eventually yeah it'd be I don't know

I can't the story's exciting The Top Investor Relations Twitter page was the funniest thing. Oh, you mean the parody one? Yeah. Yeah, that was good, though. That was good. But all right, what do you have for current state of fan twit?

Because that was basically my stuff. Okay, there was a big discussion this week about Clubhouse. So they are like a new audio-type social media thing. Not sure exactly what it is, and it's not on Android, so losers like me are not allowed on it yet. And you've got to get an invite or something like that. They're kind of trying to make it the slow build and then go fast to everyone. But it recently got some new money at a billion-dollar valuation

with only 2 million users. What are your thoughts? It's a loaded question. They don't monetize yet, do they? I heard someone be like, how would you monetize Clubhouse? It'd be tougher. I kind of feel left out that I haven't gotten an invite, but it sounds like it's kind of like a VC community.

Yeah, I don't know if it's the discussions we like with the VC communities, the crypto, you know. Yeah, maybe we're better off. I don't know. But I do worry. That was kind of something I was talking about. Yeah, how would they make money? I'm not even, yeah, I have no idea.

But with VCs being the ones that are on it, they're probably like, yeah, the people that are backing it are the ones that are also on the forum. So they're like, yeah, that's a good idea. Yeah, definitely harvest our data and run ads. Yeah, they're probably thinking like, hmm, well, two million users, but one of them's me, and everyone loves hearing me talk.

So that's probably the thought process. Anything else? Nope, that's it. Okay, we're going to hit a quick break, and then after that we have our interview with Kyler. Any highlights for you? I like how, yeah, I mean, he's a clear thinker on his investment process. He's very – well, I don't want to describe what his strategy is because it seems very flexible, but I just think he's someone who doesn't mess around with anything too risky.

He's trying to be very safe and he's trying to hold companies that he believes he can hold for a decade plus. It's always interesting to hear someone talk about that. Yeah, and he was also – we had a long discussion with him afterwards and he is very – managing money first, not like capital return. Like, he's not focused as much on beating the benchmark as he is on caring for his investors or his clients, which is kind of an interesting twist because we hear so much about funds these days. Trying to just go all out for that. Yeah, just trying to beat the benchmark. Yeah, gross of fees or whatever. Yeah, he does worry.

Yeah, it's interesting to hear him talk about the net of fees stuff for sure. All right. Here's a quick break, and then you got the interview. Cox Panoramic Wi-Fi includes advanced security to help protect all your connected devices. You'll get real-time alerts. oh like this one so you don't have to worry about malware or when your kid downloads a song from a shady link and now all your computer can play is red color red color where are you all blocked thanks to advanced security included with cox panoramic wi-fi advanced security must

be enabled in the panoramic wi-fi app restrictions apply today we are welcomed by kyler hassan am i saying that right you are okay uh and kyler is a portfolio manager at delta investment management i thought a good place to start would just be your background kind of how you got to where you are today what interests you what interested you in finance uh what are sort of the thumbnails of your career yeah so um i got interested in stocks and investing in high school uh through one of those you know you're in class and you pick some stocks games and you check them every week and you know you kind of see who wins and um you know that that would have been in uh late 2007 um or maybe early 2008 uh and so markets were starting to be kind of a little

little volatile and it was just interesting to watch the stocks move and see where they went Um, and I think a natural kind of follow-up for me was, you know, well, why, um, and then I started, you know, I started reading most of the same things that most people read, you know, the Buffett letters and sort of most of the foundational books, um, through college, I kind of continued, uh, to spend a lot of time looking at stocks and markets and investments um somewhat to the detriment of my studies you might say uh and um so i think maybe my junior year at college i said well you know wouldn't it be cool if i could do this you know full-time so i uh took my i think accreditation test uh series 65 when i was

college. And then, um, uh, my, my fifth year I was there, I sort of opened up, uh, a very small money management business, uh, with the idea of being, you know, maybe I'll start it and then work part time, uh, to bridge the gap until I get enough clients. Um, and then I was super, super fortunate. Uh, I had six or eight months in college left. And, uh, by the time I was out, I, you know, had enough people trust me with, with some money that I could just do that full time. Um, so, uh, so yeah, you know, I, and then that would have been 20, uh, late 2012 maybe. Uh, and so I've been managing money professionally ever since, uh, five, maybe five or so years independent. And then two or three years at Delta, some guys that, you know, my back office and do some other supporting roles and kind of support me in many different ways. All right. How does Delta, how does that set up? What's the strategy there overall? I guess we're going to get into your process individually, but, you know, I know people don't want to put themselves in like the value or growth camp, but how to, you know, does Delta investment kind of sit in the investment world?

yeah so they actually um so the guys that handle my back office do the same for a few different rias maybe there's i mean i don't even know the count there might be six or seven groups so um i'm i'm a part of that uh but i manage my own money with in my own clients kind of with full discretion uh so i would say um it probably depends who you ask uh i would probably call myself a quality investor uh that's that's kind of in vogue these days um but you know for different people that means different things i think for me i own a few of those kind of growthy compoundery names that some people like to make fun of because they're expensive than they are uh and then i i own a few companies that you'd call value stocks and

you know most people think they're terrible companies which from time to time they are Uh, so, you know, I, I have no overarching goal to be one way or the other, but I tend to, I tend to look for value wherever I can find it. And I own some things across that spectrum. Has that kind of always been the strategy or did you like start out cigar, but deep value and then move to quality or has it kind of been the same throughout? Yeah. Well, you know, it's funny you ask.

uh i was looking through some old holdings and one of my maybe this was i want to say it was like 2016 so not that long ago um and i was looking i had a new client come in and and i was looking at their their portfolio at the time and it was i'm gonna forget the percentages but for them, I owned Berkshire, Exxon, Norfolk Southern, and one other just kind of mediocre thing. I forget what the last one was. But you know, for those of you listening at home, if you rolled that forward from 2016 to today, you wouldn't have done very well. So I think when I started, I've always been pretty focused on cash flow. So I don't, I've never owned any like, you know, deep value stuff, but I don't, you know, those sorts of maybe industrial companies that, you know, had earnings and, you know, decent returns on capital, or at least I thought they could be decent.

Um, but for, you know, what you, what you'd call, you know, sort of low PEs was primarily I was attracted to them. Um, a few years ago I went through a project and I, and I just sort of looked at the value creation of every decent sized company in the States and then the big ones, uh, internationally. And I just, you know, I said from something like 2006 or seven through, uh, I think maybe it was 2016 when I did it. Um, you know, what's been the value creation on a per share basis. Uh, and then, you know, I just took a look at everyone that created a lot of value. And so obviously you're going to find stuff like Apple or, you know, they grew organically at some

humongous rate, but you also find stuff that, um, maybe via capital allocation, uh, and a pretty good business, you know, they could, they could actually have really good results. So once I did that i found a fair amount of quite high quality companies and i'd say naturally as i've been aware of them over time um when they've gotten cheap for one reason or another i tend to own more of those types of things all right we are gonna uh talk about your process and we're also going to talk about google and charter later on but first we're gonna get to process um so i guess as far sourcing ideas goes do you have any particular way you do that or do they just show up on your twitter timeline or twitter feed something like that uh and then how long does it take you

to sort of build that conviction so you know if you find a good idea does it do you move pretty fast on it or does it take sometimes months to build a conviction yeah yeah good questions um so i would say well that project i did i mean i mean that sourced a lot of good companies I think my process is generally you know I probably follow I don't know what the number is 50 or 100 companies that I think are great and I really like and you know I try to buy them when the forward IRRs look attractive um so when I did that project I went from you know just being aware of kind of most of the the big fairly well-run companies to hey here's some companies that uh you know are and when i say

creating value i mean uh the ones that are exceptional maybe they increased value on a per share basis by 15 or more per year over an economic cycle there's not that many of those um maybe uh if you're not looking at the the really hyper growth stuff there might be you know, 20. Uh, so, you know, keep an eye on those. Um, and then once I started getting active on Twitter, uh, I found, you know, I, so I think the first, my first interaction was via constellation software, which, which fits that mold. And so, you know, you find some shareholders of, of a really high quality company like that. And, you know, it's generally interesting what else they own. Uh, so I got involved in some of these circles and found some like-minded

investors. And now I probably have, uh, say 10 or 15 investors that tend to own similar things to me. Uh, and you know, our process is mostly just, we talk from time to time, you know, every once in a while, one of us, uh, is like, you know, I have this position and it looks too cheap. What's the problem? And then, you know, you kind of go diligence in it. And, um, I would say a lot of my ideas have come just like that. Uh, so, you know, I try to share things that I'm looking at that look really interesting and, and friends share things back. Um, and then, so, you know, once I have the idea, I usually, you know, read through the calls and, and, um, kind of the, the cues and the case. Um, and it really depends on the business, uh, for how long until I'm comfortable

with it. Um, some things, you know, you just kind of know what the business is and you can get a handle on it really quick. It might just be, Oh, you, you know, you, you read through like some of the SEC filings, you read through the conference calls, you try to get sense for management and you could be comfortable with it in you know a few days uh other things you know especially if it's a newer industry it might take yeah it might take a couple months um to get comfortable uh so it just depends um you know i i tend to own sort of bigger companies uh i don't own i don't tend to own really small stuff that's that's really niche which will tend to take longer to understand so it can be pretty quick. Okay. And I know in your letters you wrote, or maybe it was one of

the letters I was reading that you talk a lot about management. Uh, how do you assess management? Um, are there any particular qualities that you look for? Cause I know a lot of it is, is qualitative. Um, and people are like, well, I think management management is good. I think management is bad. It's kind of hard to be like, well, why? Uh, so what, so what do you look for? Yeah. Uh, I think that's really industry specific. Um, I would say there's two sides, operational and financial. Uh, the financial side is pretty easy. If you know what to look for. Um, I look on financially. The first thing I look for is, does a capital structure make sense? Um, so, you know, do you have a cyclical business that everybody knows is cyclical? That's that

there's a lot of debt on it. Um, I mentioned that I used to own Exxon. I remember back in that time, it was you know maybe whenever oil really started to to uh roll over i think that was 2016 um you know you had a lot of the smaller uh exploration production companies and like they all had a lot of debt uh which just shouldn't preclude you from owning any of it um given how sick all that business is and you know sure enough a lot of those companies were zeros um so you know do they run the company you know roughly correct financially nothing's going to be perfect but i like to see the capital structure close to how i'd run it if i was in their shoes uh you know depending on cyclicality strength of cash flow and those those kinds of things uh secondly

when they deploy capital you know what's their ir on it um i'm totally okay with any companies that just say hey we've got a lot of extra cash so we're just gonna pay it out um you know there's many companies that do a lot of M&A. There's only a few of them that I think are really exceptional at it. There are a lot that get sort of market returns, even if investors might think that they're creating a lot of value. So, but, you know, just looking at, you know, how much they spend, you know, what did the acquisition make and what's sort of the expected growth path. um you know i think if you just look for companies that are doing those things well you can avoid a lot of problems there's a lot of companies that just do big dumb m&a and it comes at a huge

multiple and and at low irrs and really hurt shareholders so um just common sense stuff on the financial side uh operationally uh that one sort of depends on the industry uh you know you can look at some quantitative factors you know you might look at where the margins are compared to peers um i think the bigger one is if you've got a good peer group you know what's the organic growth compared to those peers over time uh because you know you can take your margins up pretty much as high as you want and and hurt the business uh pretty easily so um you know i just like to get a sense of how they operate uh and you know the numbers can show some of that um you know you can just get a sense for how they think hopefully on the calls um so like you know

Berkshire is an obvious example that everybody sort of knows um you know they if you think about how Buffett manages that company it's it's sort of like you know you know it's decentralized uh You know, he kind of lets people do what they want. The managers, as long as the results are OK, and they run it really financially conservative. And I think those are generally good ideas and have worked out pretty well. You know, you can sort of know like Burlington, Northern Santa Fe, they've sacrificed some margin in order to capture a little bit of revenue. um maybe that works out maybe it doesn't but you kind of know that well at least he lets the people running that run it how they want with a long time frame and you know i think that's important so um you know just depends on the industry you just try to get to know people that run it

why they run it like they do you know how are they paid um and do they generally seem to be doing the right things so okay it's almost like you gotta like you know a lot of times management of can show good things but what can hurt you is like if you see any red flags it's almost like all right things are going good things are going good oh wait no those decisions seem uh a little bit suspect is that how you kind of go about it or yeah um and i mean i think uh i was actually just listening to um uh sean who i don't know how to pronounce his last name i think standard stockton from from ensemble talk um and he mentioned you know they look for uh idiosyncratic companies. And I think that's, that's a really interesting idea and something I do, uh, maybe

not quite as well as them, but, um, you know, I, one of the big mistakes coming in this year was I owned Wells Fargo and I could have told you, well, it's not managed well and it's not just a CEO, but it goes all the way down the organization. And, um, you know, even if it was a sort of a normal bank, you know, you, you could still have a lot of worries in a lot of places but wells fargo was you know worse for all the reasons that we all know um and you know the idea was well they can just kind of go back to being a normal bank uh turns out their organization was a lot worse than it seemed uh or well than it seemed to me i think anybody that was a little more intelligent could have figured it out themselves um but you know there's red flags

there uh but then the second part back to the idiosyncratic thing is is now i i own first republic which uh you know if you sort of know people that bank there or followed that bank um it's managed not just from the top but sort of uh throughout the whole organization very very well uh and it's obvious to everybody um you know the customer service is great um they really go after good profitable growth. And it's just an exceptionally, exceptionally run place. And so I think if you try to focus on those companies that are just so obviously so much better than their peers, you know, assuming you don't have to pay too much for it, then, you know, that's good in and of itself, but you can also avoid some of the bad outcomes. So that's what I like. I like

to find management that's just sort of obviously the best uh easier said than done was uh was that the business brew episode you were listening to yeah yeah that's a bill brewster is a good good friend of mine and uh so i've been was really excited as he was talking to me about starting it um and then the first maybe it's five episodes now i've been really exceptional uh so yeah yeah no they've uh they've been good i really like that sean one are you willing to pay up for quality management or are you still kind of i know i think bill and mcmurtry talked about this it's like uncomfortable to do it to be willing to pay up for really high quality have you gotten like around that or are you still kind of valuation disciplined

well i hope to be valuation disciplined um i think there's a i mean there's a lot of ways to answer that. The first thing is, is that, you know, when I value something, I do my best to just think of, you know, what's, what's my best guess for the future? What are some confidence bands around that? And what's my rate of return going to be, you know, with my base case, the sort of not so good case and the best case. Um, and so that applies to, to something like commercial public that's managed great or wells fargo or you know anything else um so you know management affects those those numbers and those expectations so i would like to say that um you know i i perfectly have no biases when i'm looking at something and you know a 12 percent

IRR is a 12% IRR. And it doesn't, you know, it doesn't matter if, if you're, you know, trailing 12 month P is 15 or 25. Um, I can't say that I realized, uh, back this March, actually, uh, that I, I had a bias against paying more than about 20 times free cashflow. Uh, and it was, I think we're going to talk about Google in a few minutes, but, um, that's about out the level i bought google at it was it was in march stock was pretty uh was down a lot um i was thinking about it and i said well listen i'm buying google here and it's down whatever it was not not a terribly high amount and there's other stuff that's down way more um and if i'm buying you know google here when it's outperformed a lot of the things i look at well maybe you know

maybe I should have bought it a long time ago. And I didn't because, oh, well, it's at, you know, 24 times free cash, 24 times earnings, and that's more than 20. And I just had, I just realized I had some sort of mental block in there that said, well, I want at least a 5% free cash yield. So I think that's one example of a, you know, heuristic or a cognitive bias that I've tried to address. And so, you know, going forward, I would just say, I try to look at things as they are and doesn't matter too, too much about, you know, what the next 12 months looks like. You know, I want to forecast a little longer and if I can get a good return, then I'll buy it. You also mentioned in your annual letter that you're more active in bad times than in good.

does that sort of relate you mentioned there that in March you switched into Google or you started a position are you in bad times are you trying to transition into higher quality names why are you uh more active then uh yeah biggest reasons uh taxes so uh I run several managed accounts uh you know I'm based in California so um you don't have to make that much money in California to have a pretty high marginal tax rate yeah and you know I have the majority of my money is higher marginal tax rate money. So when stocks are going up, if we're going to get rid of them, we're going to have to generally pay a big chunk of tax to do so. So that's the first thing. Secondly, I run most of my money. If I run all of somebody's money, I usually run

something like 70% to 80% invested in stocks and the remainder in, I would say bonds, but these days it's just sort of short-term treasury bills right um and so you know general strategy is is if things you know stocks are heading down you know i've got plenty of liquidity um and i want to be a buyer uh so you know if things look if the markets are lower and the the ford irs are looking really attractive you know i have plenty of liquidity to put to work um so i'd say those two things and the third thing the um you know i did also after the last few downturns i remember in late 20 was it 18 markets were kind of weak right um you know in that downturn i was buying um quality as well i think at that point constellation software was

it became a bigger position um and so i you know i sort of realized you know listen if i'm not buying sort of the levered cyclical bombed out names at the bottom or on the way down to the bottom um then i you know i shouldn't own that stuff at all uh you know i think i'm not you know given given the tax situation my clients i'm not i'm not trying to trade around um you know if i turn the portfolio over once a year you know i'd have to make something like 20 to make 12 after tax um yeah so i mean it's just like that's people don't make 20 returns forever or very very few do i think that's almost impossible so i'm just you know i'm trying to own quality for the long run um and so you know if you said hey here's some steel company and you know it's

march and trades it two times like a fake earnings number um you know that's not that interesting to me okay maybe i double my money i have to pay my i have to pay tax um but you know for every time that works you have one or two or three times it don't work and uh so i just on an expected value basis after i i would hypothetically sell that stuff and pay taxes it's just not that interesting to me uh so i need to own stuff that i can hold for a long time which you know is what we all sort of call quality uh so i have transitioned to owning um those kinds of situations and not the norfolk southerns the nexons of the world yeah the uh what does drive a sell decision uh i know it's important with the you know the situation you're in that taxes are

probably important but is it is it always you know qualitative evaluation do you have a systematic strategy for selling something um how do you go about that yeah that's a hard one it is the hardest question i think yeah yeah it's hard so first off um the easy one is you're wrong about the business um you know i'll sell it um so that's and that you know that can be that can also be difficult i mean you know the principle the principle is easy but it's really hard to you know, Hey, you know, this is still a good business and it's just having sort of a weak period or man, this, this is really broken. I need to dump it. So that's not obvious, but, but hypothetically, um, your thesis is broken. You're wrong about the business.

You know, you, you gotta get rid of it. Um, two, you know, if you see something that looks relatively better, you know, I can be a seller there, uh, easier if, if whatever i'm selling hasn't run up a lot so i don't have a big tax bill um third on valuation it depends on the business uh i i like to own stuff that has some optionality in it uh it might not be the same optionality as many other people are talking about these days um how should i say this uh you know it's not it's not like oh you know they they could come out with some new product line or humongous business that's going to be worth a hundred billion dollars in 10 years i not really like that um although maybe in one specific case uh

usually it's you know i own this company transdime and a couple years ago they they bought this business called esterline and at the time i thought transdime was worth uh say it was maybe 350 a share and they announced this this transaction um and it was bigger than they normally do and you know back of the back of the napkin math i said well i think that's going to add a hundred dollars of intrinsic value to the stock um off of a base of 350 dollars so you know if if if i could have gotten 400 after tax which i couldn't have but assume i could have you know the day before i said hey this is great you know i can sell this for more than the current assets are worth well tomorrow bummer uh now it's worth 450 um so there's not there's not a lot of

companies like that um but i own hopefully a couple uh so i don't like to sell those even if they look expensive uh maybe i'll trim a little bit if i can sometimes i can't um you know first republic's another good example you know if you if you plug in sort of current net interest margins to that bank, you say, well, stock looks kind of expensive and it probably is. Um, if we get an environment where, you know, the net interest margin is up significantly, maybe on higher interest rates, uh, it could be pretty cheap. Uh, so, you know, I like to have that option on, on higher rates. Um, so, you know, I just, the better the business is and sort of the more optionality it has, the less likely I'm to sell if it's, you know, if it's, you know, Berkshire,

i have a good sense of what that's worth uh if i could get 10 or 20 percent more than that after tax i'd you know i'd sell it uh we're not close to that though so yeah yeah okay uh i think we should move to a few specific companies the first one's google um and you mentioned that you started this position in march right we get i'm getting there right yeah okay so i guess just what's the thesis because most people know what google is but why do you like it as an investment yeah so uh you know i think one really important thing for investors is um you need to ask the right questions given where a stock is is selling uh where the valuation is and in march um if you backed out the losses from other bets which you know maybe you shouldn't uh if you

you know didn't give them credit for the cash on the balance sheet which i feel a little strongly that you shouldn't uh and then if you backed out the probable losses from their cloud business um it was it was trading it sort of a little less than 20 times trailing 12 months earnings um i mean i'm a i'm a one foot hurdle kind of guy uh that that wasn't that tough of a call uh you might argue that well you could have made some some better money somewhere else but you know for business that's growing call it you know high teens or 20 organically um to buy that at 20 times earnings uh i mean that that wasn't a super complex decision uh i think at some point it will you know slow down um and it'll grow you know at sort of more normal rates and at that point

it'll probably be worth about 20 times earnings so um i think in the interim you kind of get all that growth uh you know i think just as long as their search function continues to be more useful for users and advertisers uh they'll continue to grow at good rates which you know looks to continue to be happening um so it was it was really not a complex thesis um on top of that you have some some that's the one uh where i said that you might have a big business the cloud business um i'm told by all my growth friends that you can just take revenue and multiply by 10 and that's what it's worth so yeah right or whatever i remember you want so uh yeah i mean that could be worth a lot i i'm not the biggest expert on the cloud but i think i kind of appreciate

that you need to be a big player and spend a lot of money uh to have a chance to compete there and so there's you know three three or maybe there could be four companies um that compete and it should be a big growth business and i think they should do well in it if um you know the one the one knock on Google is, well, they've never really done anything well outside of their core business. So it remains to be seen whether they'll be successful. There's, there's been some good early indications. But you know, that, that's a good option on top of you know,

maybe they put the cash to use at some point. So, you know, it was just, it was, I think obviously too cheap in March. That was the thesis. It's trading in its terminal value and it's growing pretty fast. yeah yeah i mean that's all that's all you need are they uh well how do you think about the other bets line um i know they've lost i think it's either 15 billion or 20 billion dollars cumulatively cumulatively from that and haven't really got any you know profits out of it how do you weigh that versus them actually starting to return capital to shareholders do you think they should maybe

try to do both at the same time because they have so much cash or um or is that not something you really think that you can be like maybe you can't control that so maybe like i don't know do you think that they should cancel that at all or try to move into maybe you know buybacks and dividends or what are your thoughts there uh so first off they have um even if they you know paid a special dividend of all the net cash on the balance sheet that they have plenty of free cash flow you're right they lost i think the number is around 20 billion uh cumulatively i think their operating losses are about five billion a year um yeah i don't um like waymo is an interesting one sure it could be you know in 10 or 20 years it could be worth who knows 500 billion dollars uh

more i don't know depends uh but i think the odds of that are not high um you know some people would argue that they are and they're in pole position you know i don't know that's that's going to be a tough business that's the technologies prove to be a lot harder than people thought um i'm not i wouldn't hate to see some of the bigger ones get get spun out um you know if people want to continue to own them they can if not then don't um you know i i would like to have the option because a lot of those businesses i don't like yeah i mean when they're trying to do the uh they're spending billions of dollars on what is it those um the internet through what hot air balloons and stuff are curing uh death that seems a little bit far-fetched even more far-fetched

than waymo maybe yeah you know and i i don't hate the idea of hey let's spend some uh you know sort of moonshot money on on r&d and see where it goes you know if they just said hey listen we're going to spend some money from time to time if something gets kind of big uh we're just going to try to spin it out you know assuming there's a market for it which there's currently a strong market for all this stuff uh you know and then you know we're going to keep our operating losses you know as a result of that say it's going to be like a billion dollars a year i think that would be super palatable i think investors would have the options of what they want to own you know i might well depending on the valuation i might even keep waymo you know i don't know

Um, but I think having choice would be nice. Um, so, you know, we'll, we'll see what they do. I'm sure they'll just keep it all internally. And, you know, frankly, you know, if they spend a little too much and don't get a great return on it, it's probably not going to be enough to really impair the thesis. Uh, but it is sort of frustrating on the margin. yeah and it's the big thought uh that i mean does it seems like search isn't going away or youtube it seems like those are highly defensible businesses is kind of the the main

thesis you have is all right i mean these should grow organically at at least a 10 percent rate and it's going to be very very tough to displace them with unless there's a whole new paradigm of technology that comes in over the next decade or so right uh yeah i would say i am more comfortable uh with the terminal value of say google's core businesses than i am of something like facebook um right i've always thought that media and you know uh including social media is is terribly competitive um i like back in the day when buffett made all his money in media it was it was like you could you know it's 1975 or whatever you know you could read the newspaper or read a book or read a magazine there's like three channels uh you know like if you own one of those things you are going

to make a lot of money because there's just not a lot of competition now the internet um competition for our times is really really high uh you know i just i think if you are a media or social media company you're competing for people's time and obviously it's it's much more complex and there's there's overlays on does your advertising work and facebook's does quite well of course um but you know we've cycled through maybe in the last 15 years we've cycled through a few different platforms that people have spent most of their time on um and so uh i had owned a couple years ago a small amount of facebook stock and just wasn't super comfortable with it um obviously it's uh done pretty well since so uh take this with a grain of salt but you know i think there's

just a lot of competition there and so you can say well hey you know facebook uh if you sort of look at the numbers looks just about as cheap as google you know for me to your point um i search is not without its risks uh you know amazon in their advertising business shows you one you know you're searching for something you want to buy in app um and that is definitely a to google um i think there's a risk of whatever the next computing paradigm is um you know voice search isn't great uh you'd think that google could win once we move there but who knows uh so there are risks but i think the risks on some of the other big tech companies are much higher um so that's you know i was i'm you know pretty comfortable and i would well i guess you

know with youtube i for that same reason i'm probably a little less excited about it than some others just given the competition for people's time and and um right but but yeah the core google business i think is is quite strong and it's it's possible to think of a world where we don't need it as much but it's much harder than than for most other businesses okay so i think you already kind of answered this but would you prefer them to be broken up and then i guess if they were broken up is there a specific business that you would like the most that core search business i'm assuming yeah i mean that's a good question um i i couldn't say uh excluding the other bets i'm i'm not i'm not smart enough to know uh all those interlocking pieces because they have their

sort of ad tech business um you know i think youtube probably is helped a little bit by being under the same umbrella so even just from a kind of a human resources standpoint you have people moving in and out um so i i wouldn't say you know i i don't know for for their big business uh you know android good for that to be under the same umbrella as well of course um so i wouldn't say hey the big google businesses i want those broken up um i'm sure if they spun youtube it would have some tremendously high valuation so maybe you know maybe on some of the parts the stock will go up a little bit but i don't really care about that um but yeah i i would with the break if they were going to break up some of those smaller other bets i would support that for sure and on a i

guess on a financial standpoint we've seen companies like apple who generate all this cash flow should have consistent streams similar i mean google should have even more consistent stream with the reliability of the search business uh i haven't i guess looked at how much debt they have but you see someone like apple really use debt i would say wisely over the last you know three or four years what do you think about google doing something like that as well especially with interest rates as they are i know that's a tough that's almost a loaded question But well, I own a couple of businesses that are very moaty, non-cyclical growth businesses that throw a lot of debt on them. And I happen to like that maybe more than most other people.

You know, hypothetically, if you said, hey, you know, you're going to put Malone and Maffei, you know, in charge of Google. and we're going to run it with three or four times EBITDA leverage, I wouldn't hate that. You know, it's just, I actually don't think some people appreciate how much a strategy like that can matter to the rate of return on equity. It's a lot. That being said, you know, I wouldn't, I have a sort of, they have $130 billion of net cash.

Um, that's my, that's actually, you know, you talk about, well, you know, five, $5 billion a year in other bets losses. Well, you know, if my cost of capital is 12% and they have, uh, $130 billion of cash, you know, that costs me 15 billion a year, um, by them just keeping it and doing nothing. So, so that's actually my biggest frustration. Um, and I would support them just saying, Hey, you know, as Apple said, Hey, we're just going to get to net debt neutral uh i would really support google doing that um they can't you know some people say well hey what if they need some money for a rainy day or if they want

to do an acquisition um you know uh if they don't you know if they need some cash for a rainy day you know they have so much cash right now um a lot of things would have to go tremendously wrong for that to ever be a problem and if they ever wanted to acquire something you know they could finance it very very easily even if it was humongous uh completely through the debt markets or whatever if you want to sell a little stock do that uh so so there's no there's no need for all that money to be in the bank um yeah i'd love to see them i mean it would be better tax wise if they could just you know do a big accelerated buyback um you know they can pay it out as a special dividend i think that would be great uh you know it's a big cost to just have it sit there

to do nothing so but that being said um i don't know if many people have noticed but over the last few years uh they've actually uh they've had a small buyback program for a while last three years um they've bought back more stock quarter over quarter um for the last three years with actually the only exclusion was that um in q1 when their stock was cheap uh they bought back even more And so like Q2 is down a little bit, but, you know, that was good. They bought a lot of it when it was cheap. So they're starting to spend real money on buybacks, which I think is exactly what they should be doing. And I hope to see that continue.

And hopefully, you know, in the next few years, you know, they'll start to work that that cash pile down. But we'll see. If you were CEO for a day, would you change anything? I think it sounds like we have our answer, which is a little more debt or a little more cash to shareholders. But is there anything else you'd change? No, I'm not. I'm not the person to ask. We had some I was having some sound issues before we got on here. I'm not the most person, you know, and I think their core business, they're doing great.

You know, I have a feeling they might be hiding their true margin potential a little bit. uh but listen uh they have a very long-term asset they have regulation risk i i think they're doing just great operationally uh financial side you know i think there's some easy improvements there uh so okay all right we'll we'll transition to a another my guess you would call it a steady business charter communications um i don't i think do you i don't know i don't want to say if you do you own it in your portfolio, I guess, is that a, yeah. So before we talk about them individually, because they are a cable and broadband business,

I think a lot of people kind of get the overview of what a cable business is. They understand it because most people have it in their house, but they really don't understand how the business models work. Can you explain that, you know, overview a bit, just for a minute investment perspective, how you look at that? Yeah. Yeah. Sure thing. So I remember when I initially bought it, The stock was off quite a lot because video subscriber losses were accelerating. So the main revenue lines, excuse me, the main revenue lines are broadband internet.

That's the biggest one. Video. So, you know, when people say cable, you know, they think of the video and then sort of landlines, which some people apparently still have. uh and then they have uh you know some small and medium business and enterprise customers that sort of have similar things um i think the big misconception over the last few years and certainly about two and a half or three years ago when the stock sold off was that video matters a tremendous amount uh you know i i it's hard to you can make some estimates because they give you um, what they spend on content. So you can sort of break the revenue and the cost down and make some estimates. And it's looked to me for a couple of years, uh, like video is

makes a little bit of EBITDA dollars and not much, if any free cashflow, um, maybe somebody that knows the space better could drill down more, but basically most of the income and the value comes from internet um and so i view the cable companies as primarily internet companies um and so their model is you know internet penetration goes up a little bit in the states you know over time and kind of went up a lot this year with the pandemic um and you know we build out you know we increase uh the number of households in the country and so uh you know you get a little more houses and hopefully that's in your footprint or close to it and you can sort of build through so uh you get some volume growth that way and then and then the cable companies

have been sort of massive market share gainers uh compared to the old telecoms like AT&T and Verizon um and so through those three things uh you get some good organic subscriber growth on the internet side uh and that's really what's driven the financial returns and it's it's very sticky um it's not cyclical uh or you know in 2009 uh you know i think the earnings well even about whatever uh was up at charter i think it was up high single digits or close to it uh so you know people generally don't cancel it because it's very important uh what what metrics do you look at the most uh you mentioned ebita there um do you look at that primarily or is uh for cable specifically or do you pay more attention to the net gap numbers uh balance of both yeah yeah no i

mean you know you just take ebita throw 20x on it and there's your value uh um no so i look at operating free cashflow, which is minus CapEx. Um, that's, that's actually how I look at most every company. Um, you know, I'll look at, uh, I'm actually, I know people like to, to hate on adjusted EBITDA a lot. I actually like to look at it. I'll just, you know, if I don't like the adjustments, I'll just back them out. It's easy enough. Uh, and I'll find EBITDA dollars and then i will try to figure out you know what what are the capex needs and the working capital needs um so it's just a it's just a slightly better way in my mind to find like the true operating income of the business uh so for charter um you know two so i think i've owned it for two and a

half years and in that time EBITDA is up maybe I think it's 15 and a half billion to maybe 18 and a half uh so you know pretty good growth but nothing insane but capex dollars uh trailing 12-month basis are down from I think almost 9 billion to a little over 7 billion uh so you know EBITDA is up maybe 3 billion dollars but the kind of true operating income of the business is up five billion so right better yeah is there a lot of depreciation expense with the broadband or the cable fiber cables yeah there is uh and so there's um when you have big m&a transactions with um kind of asset heavy businesses you have to be really careful about just oh let's just use the the headline depreciation expense because you can have some accelerated depreciation so

So they bought Advanced Newhouse and Timeware Cable a few years ago to make what is now a charter. And so you have some humongous depreciation expenses. And that's why the gap earnings don't look so good. But the free cash flow numbers do is because the depreciation expense is a lot higher than the CapEx numbers. And so a reasonable question is, well, hey, can they continue to only spend seven billion dollars a year, you know, forever to to keep this plan going? And, you know, I wouldn't go that far. But but I would say you can kind of look at Comcast charters a couple of years behind Comcast is just because they had to integrate these three big companies together. And so Comcast's capital intensity, CapEx as a percentage of revenue, continues to fall. And basically, well, one tailwind there is they don't need to spend so much money on the video side because there's less video subscribers.

And so, you know, as Internet subscribers keep going up on their sort of similar network and they charge you a little more, the capex as a percentage of revenue should continue to trend down over time would be my guess and the guess of everybody else that owns cable, too. All right. We thought we talked a little bit about Google using leverage. I know that the cable businesses are notorious for using a lot of leverage and having debt on their balance sheet. uh how do you think about them using leverage do you like how they're financially set up um i know that the management in this case is important for using um you know whoever's running that is very important how do you think about that with charter and does that go into your investment thesis yes um i think they have a responsible amount of leverage um you know charter for people that kind of know the story i i didn't know the story back then but sort of read

on it when i was reading the charter uh so charter actually went bankrupt in 2009 uh paul allen had owned it and i think they were levered nine times on ebitda uh so they're you know i think i mentioned ebitda was up like six or seven percent that year or it could have been 2010 i i but in that general time and they couldn't they couldn't roll some of their debt uh and the equity holders got mostly wiped out uh so nine times is too much uh should be that shouldn't be a uh that should be an obvious statement uh you know four times is pretty reasonable i think uh you know the debt markets are wide open they've got you know with debt you've got to worry about you know one can the business pay the interest expense and then two are you going to run to any liquidity

constraints and they have their debt nicely termed out. So liquidity is, um, kind of taken care of and they have plenty of free cashflow to pay the debt down. Um, you know, the one place you can get in trouble. So Comcast runs with a little over two times EBITDA leverage. Um, you have to adjust it cause they own some other businesses that aren't kind of nearly as good, uh and shouldn't have much debt in my opinion um but but they do run that with less debt and so um you know one case in which case that uh that can be good is you know let's say the growth path of your operating free cash flow dollars is less than you think uh or flattens out at some point um you know people might on an unlevered basis uh the valuation could go from oh you know those

things if it's growing five percent a year you know maybe it's worth 20 times operating free cash flow on an unlevered basis but if it's not growing maybe it's worth you know 10 or 12 um when you have a lot of debt on the company you know that equity piece can get crunched So, you know, I guess it would be easier, like a piece of real estate, you know, if you if you've got something levered up 60 cents on the dollar and the value of your piece of real estate goes from a dollar to 60 cents. Well, your equity is worth zero. So Charter has a little more debt in their capital structure as a percentage of the total than something like Comcast. So, you know, I don't worry about that being a zero, but in a downside scenario on the valuation, you know, the equity could have further to fall for that reason. So that's one risk. It's always a risk with other companies. I personally think it's high quality enough and the growth is.

Should be there to support the strategy that they're pursuing. It seems like a pretty moaty business. It seems like it's got a pretty wide moat. But do you do you see any threats to the business? Any big risks at all? Yeah, I think, you know, just like any other business, there are threats everywhere. So the biggest thing and I think I think it would tie into what I just said, which is, well, OK, It charters worth, you know, if you just use the EBITDA multiple just so we don't have to talk about the capex. It'll just be a little simpler. Like, you know, whatever, 12 or 13 times EBITDA right now.

And it's the next couple of years is going to grow at a good rate. And then people are expecting maybe mid-single digit growth or a little more on a bottom line basis after that. Well, a good question is asked, well, what's it worth if it grows, say, zero to 2%, you know? for whatever reason. And you can look at some other cable companies that exist and you'd say, well, maybe eight or nine times. So, you know, if you go, if you have four times your average and your valuation goes from 12 to eight, your equity just lost half its value. So the biggest risk to me, I don't think you need anything to come in and just completely decimate Charter's business and make the earnings go down. I think you just need somebody that's going to take enough

broadband customers to really slow down their growth uh now what could that be um you know 5g is probably the most obvious example um so charter you have some smaller cable companies that have sort of overbuilders or um you know verizon or tnt is building fiber in some spots um and they face just a lot better competition in their fairly limited footprint and so you know they could have some problems charters it's a little better for charter because they're so big and they operate in a lot of different places that it's not just like well hey if one metro area they don't do so well and then their whole company's demolished so it would have to be sort of a nationwide competitor 5g i think if you're going to think about it there's a lot of

sort of technical problems and challenges um you know if you're looking out five or ten years you might say hey let's just assume let's get solved so so then what does it look like and i think if you are verizon you know maybe say hey we get it solved we have the customer relationship in mobile uh so it should be pretty easy to cross sell 5g into home internet um the main problem with that to my eyes is you know they've done some some fiber over over builds where um basically they build fiber uh if you know say charter already has the plant in some region uh verizon will come in and build fiber next to it that's they're over building it that's why they call it that um and so uh they've done some of that building and effectively what has happened

is as the cable companies have continued to take a lot of market share from their old sort of dsl product that has low speeds and cost too much um they basically just converted some of their own customers from dsl to fiber uh which you know great you know they they still have the customer but they have it doesn't appear that they've actually gained a lot of share besides that uh so you can look at their results and it'll be like oh they lost you know whatever 200 000 customers on their sort of online business and they gained 150 000 and their fiber business and like isn't that great and it's like well if you own cable it's they they built the fiber you know which is which is a good fast asset uh they have the customer relationship on mobile and they're

still losing to the cable companies um and so to me once 5g's here i think it might look a lot like that um i think it'll be well hey listen they have a tough relationship they've got hypothetically this fast asset um but i don't think they're going to take much share um the counterpoint to that like i said given work charge valuation is um if they could just impact the growth uh you know Charter could be at some risk, or the stock could be at least. So, I mean, we'll see. I think it will be a little while before we get some of the competition. And I think the cable companies are in a really good spot to compete.

Okay. We have a last question here on Charter, and then we'll wrap things up. What are your thoughts on management? I'm not really sure where they came from. I know they may have come out from the Liberty John Malone team. What are your thoughts on them? I think the way they run that asset is terrific. I don't think they actually get nearly enough credit for their strategy.

So Comcast, to hit their, you know, to grow their business, they mostly rely on price. So it's fairly expensive. You know, they push price up. You know, I live in Comcast footprint. You know, I got rid of my cable a while back. I pay like 80 bucks a month for my Internet. It's generally pretty expensive. and they push price to grow charters cheaper, uh, generally, and they're not pushing price so much

in an effort to, um, they talk about this a lot that, you know, they have a fixed network and the financial results are going to be best if they have the most people they can over that fixed network. So the best way to do that is to have really good service. So they've in-sourced their customer service, which costs more, but, um, like per call, but leads to better results for customers, have your customers that turn less, um, and the prices are low, lower, um, which means that they should be able to penetrate their asset base better. So, you know, those risks to 5g or from regulation, uh, you know, I think you should be a little more worried about them if, uh, you're selling more expensive products than if your product's cheaper. So, so I like

that strategy a lot um it's led to you know really great top tier subscriber growth uh i hope they continue to do it without pushing price too much um and you know my guess is at some point down the line hopefully it's way down the line um they'll be just about as penetrated as they can be you know they'll push the price level uh lever a little bit more uh but but yeah no i just i really support what they're doing um operationally they've been superb um so i i think you can't say enough good things about how they're operating that asset i feel like the customer service thing is absolutely huge yeah i mean xfinity we have or xfinity or comcast or whatever it's i mean it's awful the customer service there it is terrible yeah well actually one thing now that you guys

say that so uh my mother-in-law she lives in charters footprint uh and actually an interesting um so like two years ago she had you know like 25 megabit at&t internet service had the full direct tv and then she had her phone through at&t um and i said you know so the cable i didn't talk a lot about it but the cable companies they also have a um a mobile phone service now using verizon's network and it's rude it's cheap it's like 45 bucks a month unlimited so i changed all her stuff over uh and so she got she went to like 200 megabits internet uh you know that saved her like 20 bucks a month uh we put her on uh one of the over the top at&t uh it was direct tv now or something you know that saved 70 bucks a month and then on

the mobile phones she had one other person in the household and i think they saved 100 a month um and you know everything was better and it was a lot cheaper uh and then like maybe so so it was great but what was funny is like she doesn't know people don't know like oh i have 18t internet and what's charter like like normal people don't know um i think one of their actual big advantages is you know younger people or some people like you've had cable before like oh i trust at least comcast is annoying but like my internet's gonna work so i'm just gonna buy it um so i think that like brand name and recognition is really important and the trust and she was like oh i just i don't want to change because you know the at&t internet

always works and i was like listen this is gonna always work too but it's gonna actually be fast um so so they have some advantages there but on the customer service front we were doing a pretty big remodel in our house this summer and um i basically i pulled the the coax the fiber out of the wall on accident uh and i was like i didn't quite realize i did it i was trying to take the the thing off to paint behind it and the the cable came out and so i was like oh you know we have no internet i was like so i called i call them i was like well they've they've been sourced their you know customer service but i'm sure it's going to be this big disaster uh and so sure enough i get on the phone in like three minutes with this super nice lady and she's like okay uh why are

you free to have somebody come out i'm like whatever you know asap and she's like okay how about an hour uh and so this guy came out an hour later and he crawled up into the attic and fixed it and then fixed some places where the cable was kind of deteriorated and i was like i was like you know do i can i double my position through you or should i contact td ameritrade uh so anyways i'm sure you know that's it was just chance and like sometimes it doesn't work out like that but i was pretty impressed i mean that's a lot better than my comcast experiences so i mean it makes the lifetime value of a customer way higher like i will stick around if i know that no matter what you're going to show up in an hour if i need you i mean it's a big netflix argument too they make

it's so easy compared to someone like Xfinity, but I guess it's whole new can of worms. Okay. We'll get to the wrap up questions. Uh, I'll go first. What is one financial saying that you disagree with? Yeah, I was thinking about this. Uh, I don't, I wouldn't say a saying, um, but I think, um, I think the idea that you can just sort of blindly learn from very good investors is flawed uh and so i was thinking like okay how have i changed my investment ideas over the past few years um and so i think i told you you know i got started and so i read all the buffett letters and i was like oh this is great you know i need to be concentrated and um you know just sit around until there's something obvious and then put you know 30 of my money in it um and i just

one i think there's a lot of survivorship bias everywhere um not with buffett i think if i think if you gave him if you ran a simulation 100 times i think it's going to turn out very well pretty much every time um but like if you're looking at a bunch of good investors like i I think you just need to be really aware of survivorship bias and really worried about it. But on top of that, you know, your investor base might be way different. So, you know, what somebody like, you know, I talked about paying taxes like most most hedge fund people. They don't like they report pre-tax returns. So it's a very big difference what I'm trying to do and what they're trying to do.

And so, you know, maybe you shouldn't try to learn too much from that. Um, but, but even with Buffett, I mean, you know, listen, I had to realize a few years ago, wait a second, like I'm not nearly as smart as him. Uh, none of us are. Yeah, nobody is. I mean, you know, I shouldn't, I'm not smart enough to say, Hey, uh, this is an obviously great company and the price is cheap and I can put 40% of my money in it. I'm just, that's not something I should ever do. Uh, and so I had to kind of unlearn that, uh, because that's kind of how I used to operate and sometimes it works and sometimes it didn't, but I think the risk I was taking was, was much too high. Uh, so, so I think, I think you can read, you know, I think it's

better to, to read about people that blew themselves up and just avoid that. Um, uh, you know, I, for the same reason, like if, if you're an operational person, I don't think you should just read steve jobs's biography and he's like oh i'm gonna do what that guy did like no i think you i think it's a lot more complicated i think there's a lot of survivorship bias uh and i think you just have to be really careful so i think you need to think for yourself um you know see what people are doing read everything you can about you know funds and investors that kind of blew up or had to redeem other investors money and avoid those things you can learn from that and then you know look at buffett really use a critical eye on okay how this guy made you know what were

the big ideas where he made his money um a big one being you know his partnership days like cigar butts but at berkshire hathaway if you look at all the excess return uh it came from like he was buying compounders like he wasn't buying daddy stocks like you know washington Post in the day, Geico, Coca-Cola, Capital Cities. Those were the high growth names of the day. He was just smart enough and patient enough and maybe lucky enough to buy them really cheap, which is very difficult. But so, yeah, I would just say, try not to learn the wrong lessons. think for yourself you know watch out for survivorship bias yeah all right and last question what's one piece of advice you'd have for anyone considering a career in investing

um i think you know i think the biggest thing once you get started if you invest money for other people you you just you you have to always do the right thing for them i think that's the biggest thing i've been in business for eight years i've tried to do that i think i've done well at it um there are there are plenty there are plenty of opportunities to i mean i'm not talking about like like really horrible stuff but like but just like here's an example you know i my clients pay taxes you know i charge just on the balance they have with me so if they pay the taxes outside i could just say hey well listen you know the stock went from 100 to 200 and i'm going to sell it and put it in something else and so you know i'm going to charge on the 200 they're

going to pay the tax outside the account and so like their gross return might be a little bit better the after tax return might be a little bit worse but like my fees will be slightly higher Like, you know, there's stuff like that. Uh, and I, I just, uh, you know, being in business for eight years and just doing everything I can to make sure I'm treating my clients perfectly, um, has been a big deal. And I think they notice, uh, and you know, all my business, it would start off as a friends and family shop. Um, I've had maybe some referrals here and there, but you just, you're entrusted with many times people's life savings and it's a big responsibility and you shouldn't take it lightly and you just, you just have to treat everybody right.

That's, that's the biggest thing. And it'll, you know, it isn't only the right thing to do. It's, it's going to lead to success as well. Okay. I think that's going to do it. That's all our questions. You have, you don't have any more? Nope. I'm all good. Okay. Thank you for joining us, Kyler. I had a lot of fun. Absolutely. Thank you guys. Appreciate you having me on. Welcome back in. Thanks again to Kyler for coming on the show. Next up, we have Hot Water. I've got, what, three.

Three? I have three, too. Okay, my first one is Herbert Dice. I think I'm saying that right. I don't know. Who is that? He's the CEO of Volkswagen. He joined Twitter this week, and he walked right into a firestorm.

I don't think – I wouldn't be surprised if he left the platform within a month because That's the, obviously there were a lot of, I can't say the word in front of you. No, no, you can say it. I just, I just can't respond. There were a lot of Tesla shareholders, like you'll, you know, in his mentions, like you'll never be able to compete, that kind of stuff, which was whatever, like, I guess I was expected. But the amount of people that were mansplaining the auto industry to him and like how he should change the business.

Yeah. He doesn't know anything. I'd get so fed up being on Twitter if I were like that. I mean, it's got to be tough. But I don't think you want to. Yeah, no comment from me. Yeah. All right.

My second one, though, is the New York Post had an article this week that was titled, Humans Could Move to Floating Asteroid Belt Colony Within 15 Years. Seems a little optimistic. Well, they are the premier science journal. Yeah. I don't know. It feels like we're getting all our space takes from Pixar now. Wasn't that in the movie WALL-E?

WALL-E, yeah, and there's an Amazon show about that, which maybe Bezos is just planting the seed. But, yeah, that's ridiculous. It's not happening in 15 years. The concept seems interesting because of that, taking gravity to its own advantage where you're, whatever, using the centripetal acceleration and all that stuff. Right, you understand that.

You know what I'm talking about. But it's not happening in 15 years. This reminds me of the SpaceX in 2012. We're going to Mars in 2018, and now they're pushing to like 2030 or farther. In 15 years for an asteroid-built colony, we can barely get stuff into the atmosphere. I mean, I don't know. It's ridiculous. Dalio is in hot water as well.

He tweeted this week that he believes we are on the brink of a terrible civil war. Dude, he's lost it. Which, all right, what is that? I mean, that doesn't help. If anything, talking about how we're on the brink of a civil war just propels a civil war. Dude, yeah, and it's because of, I don't want to say it. And also, where would you even fight a civil war? Like, I feel like that all happened in fields back in the day, and I don't know what farms we'd meet at.

I mean, you are right. They did fight in fields back in the day. But yeah, this one would be a little different because it's not geographically based as much. I mean, I guess there are people. It's the Twitter Civil War. Yeah. Dalio, I don't know. Two things.

One, it's because a lot of people are upset about the wealth inequality. It's like Dalio, I mean, get a mirror, buddy. But yeah, he's downright ridiculous. He's just being radically transparent. He is being radical. Yes, he is. Emphasis on radical. he's yeah emphasis on insane dude this guy i mean it just feels robotic a little bit i don't know

man what is wrong like you could obviously there's tensions between a lot of fringe parties in the united states but this guy like i don't know most people like what did some i think colin roche who's a good follow on twitter said uh you know most people don't care like 95 percent of people aren't really no i mean i i wonder if that's what it was like during the actual civil war if most people just didn't care no not true i mean i mean they literally seceded so colin roche was like uh what did he say most people aren't even getting out of bed no and they're yeah most people are just in pajamas uh yeah what makes you think we're gonna take up arms that was i mean that dalio tweet there's some ridiculous vc tweets and stuff like that you know it's up there all right

yeah dalio i don't know we even know what to think he's okay those are my three what do you I had the New York Post tweet, which is an all-timer. I thought it was maybe Elon hacking the site. But Alphabet has canceled Loon, its project meant to beam internet connections from hot air balloons. This is another notch in the cable broadband moat. It's actually perfect for the interview we had this week with Kyler

because we talked about Charter. It's hard to disrupt that type of business. And Google kind of closing up some of its other bets and trying to be more financially sound, even though they are already financially sound. I do feel like, you know that scene in Silicon Valley where Gavin Belson walks down and he's like, I need a moon shot.

I feel like that happens at Google on a daily basis. And then they're just like, this isn't going to work. They're going to supply cable to all of America. Well, not cable, internet. And now the hot air balloons, I mean, hopefully they're getting a little more practical. Yeah, the hot air balloon thing seems insane. Waymo worked, right?

But if they close down hot air balloons and they close down that curing life, or sorry, curing death thing, that project, maybe we know they're on the right track. Yeah. I guess if I were, you know, Sergey or Larry, I don't have anything to do. Yeah, they're not even out.

I thought they were kind of in a race with other bats. Nah, they're out now. I bet you they're just like, Here's your play money every year. We'll allocate this budget to Sergey and Larry. I think, yeah, I forget who is it, but one of them, yeah, is still doing the other bets stuff, but most of them, they're out of the day-to-day and like the actual, whatchamacallit,

the executive team and stuff like that. Okay. Yeah, what else do you have? Okay, last one. Single-family home inventory is in hot water because it's down to only $400,000. It's fallen off a cliff this year as the demand for the suburbs, I guess, are skyrocketing. and it's down from over a million in 2015.

There's a little cycle it goes through usually, and it's been declining ever so steadily, but it's just totally falling off a cliff now. A lot of people we talk to, I think one of them was Ian, who we talk every Thursday with, and others have been discussing investing in home builders. I'm not really a big home builder. I really despise the trend plays

because I can get into a lot of trouble doing that, But has the home builder's thesis that people have had, it seems like it's playing out now because they're going to have to spend a ton of money. Yeah. Yeah, it could – it doesn't make sense. He even had that take way back this summer. He was early. He was early, yeah. Yeah, it was like even Motley Fool days we were – yeah, he's like, I think everyone's going to move out into the suburbs and home builders are going to get a boost.

Yeah, demand. It seems like the supply is dwindling and there's going to be a lot of building this spring and summer. Yeah. Yeah, I'd agree. I'd see that. That's a fair thesis. But then again, I do not like betting on sort of concepts or trends or I like company-centric approaches. But that's all you got, right?

Yeah. Okay. Buy, sell, hold a theme. Not very exciting. It's earnings today. So it'll be on Tuesday. Earnings from this Tuesday. We're recording this on Monday, but whatever.

So I have Starbucks, Alaska Airlines, and Microsoft. Oh. who i think to be honest i think i'm gonna sell and these are are these all seattle companies wow home bias today home bias ryan geez uh wow this is a tough one because to be honest i like alaska a lot even though it's an airline uh but i don't know i'd have to see microsoft's valuation i might just i might sell starbucks because i don't know i think they're trading at a they got a lot of debt they've used a lot of debt to buy back shares and they've kind of eked out that earnings per share growth of minimal revenue growth and they do play a good dividend but

they have been and maybe i need to check trading in like close to 40 times earnings and it's tough to see where they're going to grow i mean i guess a lot of people didn't think they could grow like from 2010 to now but i don't know they're trading out no i guess they're only trading at 25 times EBITDA but that's EBITDA also I don't think um I think the commute the no commute thing is gonna eat away at them I yeah we'll see yeah we'll see yeah they're trading at 37 times forward earnings so I don't know I might I Starbucks is great brand I don't know might sell them I might hold I might buy Alaska depending I don't know what and just hold Microsoft yeah Microsoft again you know i mean they're trading at a very premium valuation it's the ultimate 37 times earnings

or free cash flow something like that yeah i mean it's it's a ridiculously bulletproof business but yeah it's yeah i mean it's the number one jockey for a reason so that seems fair it seems unlikely i'm either buying or selling alaska it seems unlikely that they will stay where they're at because it's such a risky business to be in right now yeah and the thing about alaska is that they're one of the only airlines that doesn't have a giant debt load. So if there's a lot of bankruptcies in the future or anything like that, which with basically just bailing out the airlines, I don't know, they could be able to capture some of that new demand when travel comes back.

So that's kind of the only reason you have that thesis there, but that comes back into the trend play that we don't really like. And then the business model itself, the operating leverage can work in the opposite direction pretty poorly. So I don't know. It's a tough one. Good one, though. Okay.

Anecdotal evidence. Mine's not all that anecdotal, but it's kind of a controversial thing. Go ahead. So I'm sure you saw the stuff this week about Pelosi buying Tesla calls. Yeah, which could have been her family. It didn't have to be her. It could have been her husband or something. But don't you think people – don't you think people that have the ability to write law or write orders that could impact stocks should not be allowed to trade derivatives?

I feel like that is one of the most obvious things. Yeah. Let's put them all on 60 – let's put them all on – Pay them more and then tell them they can't trade derivatives because they can do anything in their best interest. Yeah, I mean, they should just have like a kind of a fund, you know, or like a trust or whatever. And everyone just gets pulled into a 60-40 or whatever they decide, you know, a highly diversified portfolio and force them to do that. And it's like, look, you get the privilege of being a senator. But we saw with the, what was it?

What's the person from Georgia who's married, who was married to like the New York, I believe it was the New York Stock Exchange guy who was committed total securities fraud this winter and nothing happened. I mean, she lost the election, which I guess is nice to not have a criminal in the office. But that, I mean, it seems like no one cares. Fintwit cares, but I mean, it's a big problem, yeah. That is so, God, it feels like that's an obvious problem that she solved a while ago. I hate crony, I like capitalism, but I hate crony capitalism. Yeah, all right, what's yours for the week? Okay, what one to go first with?

I got two. uh i'll go with this one so i'm moving to a new apartment so i bought some mattresses and like a you know whatever uh no i used amazon just one of those standard ones they have on there it's a similar to like a casper or purple okay um and i just thought that you know i used amazon got the cheap stuff i i understand wayfair has done well i just don't get it like i had no thought of ever going to Wayfair. I don't know. Yeah, I actually had a really terrible Wayfair experience once,

so I might agree with you. I mean, what kind of economies of scale are you going to get that's going to have you beat someone like Amazon or just go into a store? Because it's tough. I get this argument has been pretty beaten down for the last five years of people talking about how Wayfair isn't going to survive,

and now they've done well. but I just I don't know maybe someone correct me but I bought something once on Wayfair and

I don't think they did anything that Amazon couldn't yeah I've never I never screwed up my package

yeah never say never but I just don't see myself going on that website yeah well shareholders are

they're doing well they well they can be angry and rich because I think the stock's done phenomenal right

they're up like a thousand percent No, Jason Moser. Yeah, maybe we need to talk to him about that because I still don't get it, which is fine. I hope the shareholders do well. But my other one is a show that I think a lot of investors would like. I finished it.

It's called Halt and Catch Fire. It's on Netflix. It's like an AMC one. I think it started and it ended in like 2017, but it's basically about this group of people that start out trying to build computers to beat IBM, and they got like a steve jobs guy that's really annoying and then like the engineer who's kind of like wozniak stuff like that and they just kind of go through the 80s and 90s

of all the different technologies and trying to compete and stuff like that so i think any business or investing like person would love it did you watch the tiger thing yeah not good not good really no no he wasn't in it is people are like there's gonna be like the last dance for tiger but he wasn't in it i don't and they they talked about a lot of things and like his personal life, you know, with the affairs and stuff, for like a half hour, I felt like I was watching E. And I was like, I care about the golf, I don't really. Okay.

So that, no, not a recommend. But Halt and Catch Fire, definite recommend. It's like a serious Silicon Valley. Okay. All right, well, I think that's going to do it, right? Yeah, that's it. Okay, CodeCCM, check out for 7invest, another plug for us. And then thanks again to Kyler for coming on the show.

Am I missing any disclosures? No. Oh, next week will be our 100th episode for our Tuesday show. So there we go. Wow. That's a big day. Huge day. But yeah, we're not financial advisors.

Anything we say or discuss here on Chit Chat Money is not formal advice or a recommendation. Thank you guys for listening. We'll see you next time. you