Chit Chat Stocks - Our 6 Favorite Never Sell Stocks + Analyzing Ackman’s Portfolio And Shareholder Letter $UBER $CMG

Episode Date: October 3, 2025

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. This week we discussed: (00:00) Introduction (01:13) AI and E-commerce: Shopify's Partnership with OpenAI (07:25) Nike's Earnings Report: Challenges and Market Position (14:09) The Emergence of the Texas Stock Exchange (22:58) Never Sell Stocks: Criteria and Personal Picks (44:47) Spotify's Leadership Transition and Its Implications (48:21) Project Kuiper: Amazon's Ambitious Venture (51:58) Portillo's: A Fresh Perspective on a Struggling Stock (52:52) Electronic Arts: The Largest Leveraged Buyout Ever (58:23) Bill Ackman's Shareholder Letter Insights ***************************************************** JOIN OUR NEWSLETTER AND CHAT COMMUNITY: https://chitchatstocks.substack.com/  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Stocks, the podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined as always by the one and only Brett Schaefer. If you are new to the show, if you're a new listener, first of all, thank you for tuning in. If you are listening on anything other than your podcast players, please give us a follow so you never miss an episode. We have a full content slate today.

This is our weekly Power Hour episode that we do live on – typically on Thursdays at 5 p.m. Eastern time, but we're doing it a day early. And we have everything from a – I think the largest take private deal of all time in electronic arts, a stock I think Brett and I both used to own. We've got Egentic AI. Shopify is collaborating with ChatGPT. gbt and then brett and i are going to be going through our top never sell stocks we can kind of maybe talk to some news first and then hit that and then we've also got some earnings as well nike earnings the apparel giant that seems to be crumbling before our eyes but brett where do you want to start oh it's a good question uh thank you to all the listeners for joining this week

hopefully you have a good show and if you have any questions join the live chat as well i was told last week ryan that you didn't want to do any more ai talk but i guess this is a loophole there's something productive we can do here because uh shopify is getting used by chat gpt i saw some very very hot takes that this was going to disrupt amazon so why don't you go through what they are doing, how it affects the e-commerce world, and then we can give our thoughts. Yeah. And let me clarify, because someone did ask us to talk about this. The topic I am tired of talking about is the ROI on AI CapEx, because I just don't think I'm going to have any brilliant insight there. But some of the applications and how it affects individual

companies and certain ai use cases i'm more than happy to talk about so a little bit uh on in terms of the details of the partnership so open ai released a press release as well as shopify this week that they are partnering with both open ai is partnering with etsy and shopify to power direct shopping from within chat gpt so here's a quote from open ai's press release it says us chat gpt plus pro and free users can now buy directly from us etsy sellers right in the chat with over a million shopify merchants like glossier skim spanks and viore coming soon so for people imagining what this would look like it's really not that complicated i watched the quick demo basically it's just native checkout within chat gpt it's kind of like

instagram shops uh in a way where it's just keeping you on the platform but sort of shop within the wait so you have to still log you have to still put your payment details in i think it can be auto stored in chat gpt but you just tell it can you communicate with it with a sentence and say hey why don't you buy can you buy this what have you and then it goes and does it for you or do you still have to go through a step-by-step process i'm not sure that was not displayed in the demo the demo was something like show me a bunch of options for ceramic bowls from that are less than a hundred dollars that are for my friend whatever and then it give gives you options you click on it takes you to a checkout page you pay so i've already done that with gemini

yeah uh does it does it redirect you to a separate website well maybe but you can get all these listings like i'm looking at upgrading my laptop for work and i've been doing a bunch of comparisons i said hey with these classifications you know size i want a bigger one blah blah blah it gives me the listing so i'm not sure what sort of innovation this is but maybe it's the fact that it's through shopify payments i'm not sure again I saw people saying this was going to kill Amazon. I think if the shopping experience is what mattered, Amazon would be, it would have been dead a long time ago. It is much, much more difficult. I think at least to search on Amazon versus maybe even through Google or probably like the Shopify

application or even through social media, but Amazon has the delivery network. And I think the follow-up question I would always ask my AI, whatever one you're using here, chat GPT, Gemini, or any others is how can i get this delivered the fastest and then he goes well if you use amazon it'll get delivered the fastest okay boom i'll have it tomorrow instead of in two weeks yeah i can't imagine that people are like well now that i can buy it through chat gpt instead of searching it on google i'll gladly take a one month delivery time instead of having it by tonight So I think anyone that believes this is going to disrupt Amazon doesn't necessarily understand the competitive advantage that Amazon has, which is entirely in its broad selection and delivery. And we're forgetting about Rufus.

Andrew Rufus, I guess. Gotta love Rufus. i think this is that's i'm being somewhat joking but you can already do this on amazon with their hilariously named uh bot called rufus yeah i don't think much of this i think this is two companies that love press releases doing a partnership together that makes things maybe a little easier at the margins, but it's not that different than having them redirect you to a Shopify website. The user experience is not really that different other than maybe you're saving a click or two. So it can populate ideas for you, but I

believe it was already able to do that to begin with so i don't think this is a bad thing for any of the people announcing the partnership open ai shopify or etsy but i would not blow this out of proportions yes this could become a viable avenue for more e-commerce in the future Like maybe there's more commerce done through AI chat interfaces, but it doesn't actually change the chain of companies in that process. Like it's still – you're still going to go to a Shopify site even if it's embedded within ChatGPT. You're still going to use the Visa payment rails. You're still going to use a Shopify – whatever their Shopify tracking app is. And if you want quick delivery, it doesn't matter.

You're going to Amazon. So yeah, I don't think there's that much to talk about here. I guess it's a positive if you're an Etsy or Shopify shareholder. Yeah, it can't be a negative. But who knows? All right, let's talk Nike. They are a good holdover stock for the in-betweens for the earnings season. They reported this week, I'm looking at the stock right now, of 6.5% today, Ryan. Coming off a bit from the lows, it's actually up 15% in the last six months. We're

at about $74. And if we look at the lows in the spring of this year, it was getting close to $50. So what happened? Take us through the earnings. And then we can talk about how it affects my psychological long in Lululemon, right? We can use the transitive property there. But yeah, go through the numbers. And what stood out to you in the report? Yeah. Any positive response in the stock price must have been from commentary on the call or something like that around basically strategic moves because the results were definitely nothing to write home about. Well, expectations. Stock's down a ton from all time runs. Yeah. I mean, the expectations were horrendous and the results were slightly better than those horrendous expectations. But in a vacuum, you look at these results and say constant currency revenue growth was minus 1% for Nike. They have not grown virtually at all in five years. apparel footwear both struggling from a competitive standpoint and footwear specifically they are losing share to on running they're losing share to hokas who both continue to just chug along and grow every quarter and then on top of it they reported their last 12 months

is the worst gross margin that they have had in 20 years because they have had to discount all of their inventory heavily in order to sell through it, which raises some questions about brand impairment. I think Nike is seen as a premium brand, maybe because of the years and kind of heritage they've built around athletic premium apparel, but also because it's been fairly expensive. So what do you think of it as the price drops? I don't know if it impairs it as much as everyone thinks i i still think if i can get nike 25 off compared to normal prices i'll take it i still like the brand but there is some questions about brand impairment so all this is to say apparel in general is struggling a bit so we've seen this with lululemon

so it's not like nike's isolated footwear they are losing share and that's something to watch monitor but they are still the 500 pound gorilla in the room when it comes to footwear like even if you combine hoka and on running they don't come close to nike's footwear revenue but they there needs to be a turnaround at some point especially in the margins like the gross margin pressure is what's leading to has led to the stock selling off so sharply my question to you i guess is there anything that would get you interested in owning Nike? Or is this another prime example that never invest in apparel is a good principle to have? I think it would be very tough to get me to want to invest in Nike, given its size, given its existing market share,

given its exposure to China, where you're seeing local brands do quite well over there. And I have no read on whether Nike is going to make a comeback there or if they're going to go to zero in that market because of these other ones. I think it's called Anta, maybe, and some other ones. Again, I don't know much at all. Lululemon does interest me because it's one, cheaper than Nike, I believe, on earnings ratios, and two, much smaller. I think I can get a little bit of a better read on that they're not totally dying in the United States, and that's 70% of their business. Well, United States and Canada. So compared to Lululemon, no interest whatsoever in Nike. Too big. You kind of look at it and go, well, how does this stock go up 10x for me

over the next 20 years? It's kind of tough. Market cap's already $100 billion. You already have so much market share. You have a lot of competition in the apparel space. It's not going to be a winner take all area and it takes strong brand management. I think it's an easy pass for investors. Yeah. I couldn't agree more. And this is a company that has missed its targets for more than a decade. Like if you go back to their old investor presentations, they threw out all these lofty growth assumptions and they got a premium for it. and it's like no one ever held their feet to the fire because they missed those every single time and our friend alex morris does a lot of good writing on nike covers them really well and he

talks about it the name the what's the name of his service for the science of hitting tsoh sorry investment service yeah the yeah they've been chronic underperformers of their own expectations and i agree with you like if you are banking on an apparel turnaround i think the probability of an apparel turnaround is similar for lulu lemon and nike like all the if growth is going to start coming i think it's going to happen for both would be my expectations i don't see why one is significantly better position than the other i think they're both kind of similar premium athleisure wear well the one thing you could argue is that nike has much more exposure to footwear and lululemon is much more exposure to premium athleisure clothing

that's the only difference um but besides that yeah i agree right now i might take apparel between those two categories because it seems like footwear nike's really struggling but the my point is both of those seem like a somewhat risky bet you're you're banking that this is not the beginning of a downtrend and sort of the erosion of their market position but if i'm going to make that bet i would much rather do it eight times a bit which is what lululemon trades at than 30 times a bit which is what nike trades at so like you're not getting paid for the risk, in my opinion, on Nike. I agree. Okay. Do we want to talk EA, Ackman's shareholder letters, or the Texas Stock Exchange?

I thought the Texas Stock Exchange stuff was pretty interesting. Let's save Bill Ackman and maybe some of the other headlines for after our Never Sell discussion. Do you want to go through the Texas Stock Exchange news? Yeah, I think the general can wait. Texas Stock Exchange. It's going to be called TXSE. I think they're supposed to call it TEXI, which I'm going to veto that. We're not going to be calling it that. The Texas Stock Exchange makes sense. I wrote down that this looks like a moat test for the New York Stock Exchange and NASDAQ. Here's a quote from their press release. The Texas Stock Exchange received approval from the Securities and Exchange Commission Tuesday to operate as an exchange, paving the way for

the texas stock exchange start listing shares next year hand up i did not know this was a thing apparently it's happening in dallas and they were inspired by quote-unquote onerous regulations at the new york stock exchange and nasdaq i don't know if that can be if i they're being honest there because there's a whole trend of just chinese fake companies getting listed on the nasdaq and if they can get listed pump and dump their shares and get out which happens quite frequently are we sure that there's onerous regulations to get legitimate companies from the united states onto the nasdaq but i guess that's a whole nother topic the first approval uh sorry this was the first approval for a national securities exchange in decades which

kind of shows the moat from the New York Stock Exchange and NASDAQ that they have had. There is backing here from the Texas Stock Exchange from BlackRock, Schwab, and Citadel. Here's a final quote I have. Texas Stock Exchange will launch trading as well as ETP and corporate listings in 2026. Over the long run, Texas Stock Exchange's mission is to reverse the decades-long decline in the number of U.S. public companies by reducing the burden of going and staying public while maintaining some of the highest quantitative standards in the industry. As an investor, I like that. The more stocks out there, the better.

Better for the show, too. We can talk about more companies that are publicly traded. Now, what do you think here about if you were a New York Stock Exchange shareholder, NASDAQ shareholder, whatever respective companies they're under, would you be concerned at all here? Because I look at this backing, BlackRock, Charles Schwab, and Citadel, And if they weren't there, maybe I wouldn't care. But those are three huge players in the industry that could kind of get momentum going for a third player in this duopoly.

I don't know if I'd be a seller if I were an owner of the New York Stock Exchange or Intercontinental Exchanges, the parent company. I wouldn't be that worried yet. I certainly wouldn't be discarding shares of an operation that's withstood 100 years of operations. But I like this. We actually talked about this a year ago, Brett, I'm pretty sure, on the show when they announced that they were going to try to build these efforts. There's an approval? Well, my memory is not serving me well there. If it leads to more companies coming public, I'm okay with it.

I have heard before a lot of companies complain about the requirements to list on the NASDAQ and the NYC. I just took a quick look and there are like, obviously there's listing fees. So those can be expensive depending on the size of the company. Not only there's an initial listing fee, but then there's like the annual recurring listing fees, which if you follow the New York Stock Exchange business model, you'll see that in their KPI reporting. Sounds like a good business to me. The big one is they're pushing certain corporate governance standards on all the companies. So I think this might – ESG stuff?

A little ESG? You have to have a compensation committee. Ah, stuff like that. So I imagine you're probably not the biggest fan of that. We've talked about the pointlessness of compensation committees. Let's get rid of that requirement. That just seems to be a scam for the compensation committee companies. If there's no requirements on, say, all the stuff that no one cares about on the proxy statements, such as ESG and, frankly, as an investor standpoint, the diversity stuff, I don't know if they require that.

But then also these compensation committee things, maybe that is for the best. Maybe it'll convince the New York Stock Exchange and NASDAQ to lighten the load on stuff that doesn't really matter from a public company standpoint. What we do care about is just that your accounting is legit. That's it, right? Do we care about anything else? No, that's the big one. But it's just – my question is, is it really the exchange's role to enforce that, to enforce all this stuff? Like if they pay their fees and they're in good standing with the governing body for accounting, so the SEC and the –

Why am I blanking on the organization that collects my taxes? IRS. The IRS. I was thinking IRA. Yeah. Yeah, I mean, if they're in good standing there, I just don't see why it's the exchange's role. But I'm looking at – I asked ChatGPT, why do companies think there's such onerous requirements? And there is just a ton of stuff to be compliant with all of the NASDAQ and NYSE's thresholds.

There's also financial thresholds, so a lot of smaller companies just simply can't do it or it's too costly to be on there. So I'm for this. I hope it works out, but I would say prove it. Let's wait and see. The mode test is probably going to work out fine. All they got to do is just not be so onerous with these requirements. And then why would anyone want to list on the Texas Stock Exchange? Also, you can list in multiple places.

So I still think trading will be centered on New York. I mean, yeah, it's been around since 1790. I think the New York Stock Exchange and NASDAQ is much newer, but I think the New York Stock Exchange is going to be around for at least a couple more decades. It's not going to kill their business. If you are a regular listener to Chit Chat Stocks, then you've probably heard us talk about Interactive Brokers. Here are four reasons that Interactive Brokers is better than other brokerage platforms.

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You've got phenomenal backing, BlackRockSchwab Citadel. I can't think of a better name brand backing to have if you're launching a stock exchange, not to mention the probably insane liquidity that they are willing to throw at it. So, yeah, if you're a holder or a shareholder of ICE, Intercontinental Exchange, ICE is the ticker, and this ends up being absolutely nothing and not putting a dent in the business, I think you should feel even more comfortable owning those shares. Let's talk Neversell, our Neversell companies. How do we want to do this? Do we want to do it as a draft? We can, or we can basically do our rankings. If it's just from our existing holdings, there will be some slight overlap, but I think coming

up with a ranking or just a list of companies that are never sell stock, what exactly, before we get going, let's talk about why we're doing this, what a never sell stock is, and how it's helpful for us, the philosophy as an investor. Yeah, this actually forced me to think about – it forced me to look at my portfolio and there are certain companies that just in the back of my mind, I never think about selling. I'm kind of – unless the stock goes up like 100X or whatever or 10X in a year or something in really short order, it's unlikely that I'm even going to look at it as a sell here. It enters the Shopify Palantir zone. Right. That's essentially how I think about it.

Yeah. So I had to ask, like, why do I think that way? And basically the answer that I came down to is it has nothing to do with the type of business that they're in. It has nothing to do with the size of the company. So I think never-sell companies come in all sorts of shapes and sizes. You could have a trillion-dollar market cap world leader in e-commerce. You could have a Canadian vertical market software serial acquirer. I think people know who I'm talking about.

Or you could have a small cap student lending company. There isn't any one type of business for me that determines whether or not the stock is a never sell. The theme that all the companies have in my mind that end up being never sells is that management treats it as a never sell. So oftentimes that requires the company to be founder-led. But when the person running the company has no intention of making money fast or hitting short-term hurdles, they end up making choices for the business that they think will help shareholders the most over the long run. And that's where I want the alignment and I don't want to be trading in and out of that kind of thing because if they are thinking ultra long term, if they think of themselves as never sell shareholders, I feel a lot more comfortable calling that a never sell as well. It's when my timeframe is mismatched with management's timeframe that it doesn't qualify. It doesn't end up in the never sell camp for me. What do you think is sort of your criteria?

I think that makes sense. It's when you're uncomfortable with their time horizon that can make you uncomfortable as a shareholder. if you have that alignment, you can have that comfort quarter over quarter over quarter, not really worry about where the stock is trading at. I think I could sum it up in two criteria for myself. One, management and culture, which just top-notch management and culture from an investor standpoint, from the fact that they think long-term, do rational capital allocation, all the things that you'd care about. And then second is a wide moat business. Those are the two things. As long as there's a wide moat, whatever it is, I can be confident in the

durability and holding through whatever market cycles gets thrown our way. I think I could... I'm going to talk about a company here that's on my never sell list that I would not describe as a wide moat. So wide moat helps, but I could end up calling a company a never sell even if it doesn't qualify necessarily as a wide moat but okay well let's let's go through our existing holdings again these have to be ones that we actually own uh although there could be some others on the watch list that we might buy at the right price let's go through our never sell i think if we just list them i don't even know if i rank i could rank these they're kind of just all in the same category um let's alternate let's alternate okay let's just alternate one by one

to just choose them i think i have three well i think i got four i have four from my existing holdings okay go first so i got three okay first up we're just gonna go from the bottom of this bottom of this uh fiscal ai dashboard to the top nintendo even though i said i'm going to sell at the end of this year at 30. I think that's just probably a trim. And that's kind of just a prediction we made for our annual predictions episode. It is a culture and management that thinks long-term.

Some may say too long-term when they get impatient with what the company is doing. And I believe it's a wide mode business in entertainment. They nurture their brands. They don't oversaturate their content out there. they are have been the premier video game player especially for family-friendly content for a long long time if you have any sort of bullishness on disney you should be bullish on nintendo and their durability because i think they are much much more durable and have all the characteristics

for a never sell business for someone that can go look i'm gonna buy this i'm not gonna think about it for 40 years and i'm gonna be fairly confident the result will be adequate So that one kind of surprises me. I agree. It is a management team that thinks insanely long-term. They've been around for more than a century now, and they care so much more, I would think, about preserving their brands than maximizing profits. The only thing that would maybe not qualify it as a never sell for me is that it's still fairly event-driven in terms of product events or drive certain moments for the company and financial results. So I could see myself – the stock trading wildly around certain events and that leading to potentially a sale decision for me. I'll go with my number one, although I do think that's a good pick. My number one is Coupang. They are the e-commerce leader in South Korea, and I think they're hoping to become the e-commerce leader in Taiwan as well. The founder, Bom Kim, has significant insider ownership. I think it's around 70% or more of the voting power. I should probably double check that. But he runs this company. It's his company. He is bought in for the long term and seems to make decisions based on maximizing value for the business five, ten years down the road as opposed to maximizing value today.

And you see that really with the CapEx investment and the infrastructure investment, much like Amazon 20, 15, 20 years ago, and even still the day where they continued to – they were relentlessly focused on how do we serve the customers as best we can. And Bom Kim has unapologetically copied that mantra, and he actually talks about being – looking up to Bezos and trying to copy his model and be customer-obsessed. So I like them. They continue to make investments today that could hurt margins in the short term but will benefit lifetime value of their customers over the long run. Okay, that's a good one. I own it as well. I guess I didn't put it on my list. But it's good to put on there too.

I could easily include in my Never Sell portfolio. My second one is going to be Interactive Brokers. We've done, I think, one, maybe multiple research report episodes and newsletters on this one. I bought it earlier this year. So go check out that research report if you want full details on the business model and all that good stuff. They do have the founder, the insider ownership with the founder, Thomas Pederphy. It's actually a great profile of him on Colossus.

I think it's called Colossus Review. It's free profile. It's really great. And it goes through basically his life and his philosophy around business management, although he has passed off the day-to-day management to a current CEO named Milan Galic. And there's some funny stuff within the Hatch interview where people compared IBKR to Costco with the scaled economy shared model. They lower the cost for all the customers and they try to really just keep things as efficient, bare bones on the back end as possible to drive costs lower, make it a better product for their professional investor base and even individuals like ourselves. And then they can have those lower costs, at least a better profit margins, and they can reinvest into even more

technical cost savings. But when he was asked about that, he actually, and I guess he's older and also an immigrant. So maybe he, and he's also very rich. So he hasn't, you know, lived the middle-class american life but he didn't seem to know what costco was which was hilarious and he said yeah i've never been to a costco i and i don't read business books so he just kind of passed it off like yeah i don't really care so costco that's kind of insane that he doesn't know what costco is he's a strange guy and it takes that eccentricity to become one of the first electronic market makers come up with interactive brokers and create a business that is so automated and efficient in the brokerage space that you have better profit margins than

Visa and MasterCard. It was also interesting, and we do love Interactive Brokers as a sponsor, is he said he has gone, his new goal is because they want to expand their user base, is he's now in charge of marketing. And he says he's tackled that. So that's who we're technically dealing with when getting new podcast sponsors, which I thought was kind of funny, cool, but also a bit intimidating given that he's kind of an intimidating man well he's welcome to join the podcast whenever he wants whatever he wants you can promote ibkr all day to our thousands of listeners but when i look at ibkr its valuation today pe is 36 definitely not on trough earnings because if anything we're on peak earnings if this is the bubble that some people think we're in if

not, it's, it's a hundred percent of bull market and that, you know, that helps their trading and their revenue. But I don't really care because I know they're going to deal with the market cycle perfectly fine. Um, they're going to come out stronger on the other side. And as they keep gaining users, they should grow over the longterm. I'm comfortable with never selling this. I think the only way I would sell is if the PE got to a hundred, 200 maybe i would trim but i just see no reason why i need to sell this it's an incredible business i think it's one that's going to stand the test of time and can be an easy durable winner in your portfolio for if you have a decade 10 to 20 year time horizon yeah this is a good example of

actually seeing the never sell in practice because would you buy if i quoted you that earnings multiple on potentially peak earnings today probably not definitely not but i bought it 40 in the spring but now we're at 70 you're nowhere near selling that so it kind of goes to show that it belongs in that camp okay and the other thing i want to follow up on there is they are a company that has continuously driven down cost and or driven down cost for the customer So driven down prices. It is actually so rare that you find a company that their true intention is to drive down their price. As investors, we talk about the examples all the time and how it's so beneficial and Amazon's done it, Costco's done it, IBK are very successful companies

have focused on driving down price. But those are so rare relative to most companies out there. And I challenge someone to give me an example. There probably are some out there, but give me an example of a company who has made it their mission to drive down price that is not founder led. That it's a mercenary CEO who's come in and said, all right, we're going to do as much as we can to drive down price. I don't think there's a lot of examples like that. So that leads me to my second company who intentionally drives down price, Wise. Wise for me is probably in the never sell camp. Once again, huge insider ownership. They constantly, they talk about trying to take cross-border transfer fees to 0%. They really want their fees to be nothing.

They – their mantra is money without borders. That's pretty rare and that's why they've been able to drive such significant user adoption. My only concern is that maybe something happens in the corporate culture or I just haven't owned the business for a long time since they – I mean they haven't been public that long either. So it's – there's still room for them to surprise me in a negative way, which would maybe lead to me selling. but we can call it a future never sell candidate i like this choice founder seems to do the same thing there are people that compare ibk and wise a lot and i kind of agree um yeah the founder treats this like a never sell which makes it that much easier for me to treat it like a never sell but yeah i'll leave it it was the europeans they got longer time horizon sometimes than the

americans yes they do all right what is your third company all right i'll do this one for my third and i think i'll say the last one for either one that i know you're also going to pick but i think listeners kind of know if they've been a long time listener of the show both well my largest holding my third one and again it's one that some people do not like it is airbnb founder led founder mission led uh we talk about the eccentricities of the founder brian chesky and how that can be good and bad in regards to wasteful spending. But he says he's going to be at Airbnb for the long haul. I think they have a long term plan to become a can't miss travel lodging and perhaps experiences platform, although that's a TBD there. But either way,

I think this is a wide mode business with management with a long term time horizon. And If Airbnb stock went up to what you would call a bubble PE ratio, however you define that, I don't think I would consider selling whatsoever except for trimming on that sleep number percentage of the portfolio that David Gardner talked about with us. yeah this one i would also call a never sell but for a little bit of different reasons than some of my other companies for airbnb i think the upside potential is so high that it's almost like a hedge against my own stupidity of i don't want any risk of this becoming a 50 bag or whatever. And I sold early because I got fed up with stock-based compensation or whatever. So it's almost like I have the never sells that I really appreciate management and culture. And then I have the never sells of the upside is so high. Just don't touch it. Don't

look at it because you're just going to get in your own way. That's probably where this qualifies for me. Yep. Yep. All right. What's your last one? Last one for me, I think this is the one you knew i'd be talking about and it doesn't have a moat i don't think seeing as it's basically culture moat culture sure it's a culture uh the company is nelnet we've been this might be the longest i've held any company actually they're they're one of the first companies that i still own that i found i think uh the original person that brought it to us was jim gillies an investor we both really admire and this is sort of an oxymoron but a mini conglomerate where they've got small cap we'll call it small cap it's a small cap should be large once if the value got unlocked

sure yeah that's that's the goal now they they own a student lending operation both on the servicing side as well as the they don't originate anymore but it's a big student loan portfolio that they continue to reap the cashflow from. And then they're diversifying that into a variety of businesses. Probably the most notable being their Nelnet Business Services, which is, or I believe that's their naming for it, but it's basically education software, which does seem to be quite sticky and it generates a good amount of income each year, but it's not like, I'm not in love with the company for the business specifically. I just really like management's capital allocation skills and the way that they treat shareholders. So they've grown book value per share, I think

at around 16% annually over the last almost 20 years now. And they constantly understate the value of the assets on their balance sheet. They constantly make investments that masquerade profitability because they don't care about maximizing profits in the short term and often they don't maximize profits in the short term well stated profits yeah they they like to avoid taxes legally yes john malone style and that can make the earnings look worse when in reality they're generating significant value for shareholders yeah it's one of those long-term long-term time summarizing capital allocation track record skin in the game everyone stays at the company for a long time midwest too you're not you're not in san francisco la miami or new york i think that

somehow they're not getting the midwest premium though that some other companies seem to get that's all right they're they've reduced let's actually find it quick on fiscal ai and see what they've reduced their shares outstanding at for the last like 15 years whatever the number is because I would rather have them trade at a consistent discount to the sum of their parts because they're just going to take that shares outstanding down with all their excess cash flow. Let's look at their shares outstanding. $54 million in December of 2005, which is right around the time of their IPO. $36 million today.

Down on average 2% a year, which might not seem like a lot, but they're paying dividends and reinvesting at an insanely high rate. all the excess earnings they're generating from their financial services, all the stuff that Ryan already talked about, we've talked about before on the show. And that's a cumulative change of negative 33% from 2005 to today. I mean, that really can add up to long-term returns. If they can do the same or even slightly better over the next 20 years, that's how you turn a company from a 10-bagger into eventual 100-bagger. All right, folks, before we move on, we need to tell you where we get our financial data. Fiscal.ai. Fiscal.ai is the complete stock

research platform for fundamental investors. I use the platform pretty much every single day. You'll see the charts on our podcast and you'll see it in our newsletter. This is our one-stop shop for stock research. They've got up to 20 years of financial data on all companies globally, including company-specific segment and KPI data. That means Amazon AWS revenue, SoFi's total members, Google's paid clicks growth, and literally millions of more data points. They've also got earnings call transcripts, ownership data, company-specific research reports, and much more. If you want complete financial data at your fingertips, then you need to check out Fiscal.ai. And if you use our link, fiscal.ai slash chitchat, you will get 15% off any paid plan. Again,

that is fiscal.ai slash chitchat. The link will be in the show notes. Yeah. And it's one of those where the chairman, I believe he's still the chairman, Michael Dunlap, who is still involved from what I can tell. He's not the CEO and running the day-to-day, but he's still involved on some of the capital allocation, I believe. He has made it sort of his life's work and his life's project and he treats shareholders fairly. And like you said, you get comfort in knowing that if this were to sell off – like let's say you buy it at a valuation that you think is fair. Maybe it's not dirt cheap, but it's fair. If this does sell off, they will capitalize on it.

When you have a management team that thinks long-term, they're going to capitalize on a poor valuation. They're not going to, oh, I'm going to jump ship and go to the next company that can give me a nice signing bonus. So yeah, those are my three, Coupang, Wise, and Nelnet. Did you have any honorable mentions that weren't talked about yet? Well, I would have had Nelnet as well. I was thinking of putting the Mexican airport in there, but maybe 2048 is the never sell. I love when people always say, well, what happens in 2048 when their contract ends? And I go, I don't care.

I'm going to be 60 years old. I think that covers it, though. Those are ones that I never sell. Well, speaking of though, chairman and companies that should be in my never sell portfolio if I wasn't stupid and got rid of the position, a stock that we owned 10 bagger ago and didn't appreciate the gains, Spotify, Ryan, Daniel Ek, the founders officially stepping down as CEO, moving to chairman and bringing in the co-presidents Gustav Soderstrom and Alex Nordstrom as the co-CEOs. I guess this is essentially formalizing what has already been

happening since 2023. They were really in charge of the day-to-day. He's in charge of broad strategy and capital allocation. It's kind of similar. You know, you look at Nelnet, seems like that is what's happening. You look at IBKR, that's what's happening. You look at even Nintendo with Shigeru Miyamoto who was kind of the founding of all the brands the founding developer of all the brands at Nintendo who is kind of moving to where he thinks he's needed within the company

from a broad strategy perspective it seems like these never so companies have some sort of founder like character or manager that can kind of evolve with the business and properly set up the leadership for what the

business needs to keep succeeding but when we look at Spotify here i mean you put a discussion question down this is bad for spotify shareholders i think it's kind of a nothing burger stock was down a bit but it's still pretty much a 10 beggar from the lows in 2022 yeah the stock did sell off a bit on the news but it seems a little bizarre to me i don't think he's been crazy involved in the operations lately and And in reading his book and kind of learning more about him over the last few years, it feels like he's kind of moved on maybe a little bit mentally from wanting to manage the operations of Spotify. I'm sure he still cares a lot about it and cares about the strategic direction.

But yeah, he just had a good interview with David Senra on a new conversational founders episode. And it did seem like he didn't care about, you know, building the Spotify interface anymore. But there are certain things that are important for their long term strategy that he wants to have input on. And he's just caring about capital allocation. Now, he said that he's really embraced investing and tried to learn and learn from Munger and Buffett, but I hope that's changed over the last three years because capital allocation, their post IPO period from 2070 to 2021 to 2022, their operating expense discipline has had a little bit to be desired. But hey, maybe they've changed and they're more efficient for the better. Yeah, I think sometimes a severe bear market will teach you to care about cash flow. Yeah. Let's shift gears. There were some questions in the chat. I don't know if you want to take any of those, but if not, let's talk about the largest take private deal of all time, Electronic Arts. First, yeah. Why don't we hit this Kuiper one? It was an interesting question. I think that person's waiting. Thank you, Gene, for asking this. Do you think Project Kuiper will

become a substantial part of Amazon's business? Given the fact that Amazon is doing $700 billion in revenue? I don't think so. But if they can successfully integrate it into Amazon Prime, I think there's a huge opportunity for them to upsell this. It's quite the risky endeavor. They're investing, I think, $10 billion into the project, and they seem to be significantly behind Starlink. You also have fixed wireless competition, obviously the fiber to the home competitors, all the stuff within internet. I'm not sure exactly how it's going to work. I mean, you even have you know the company asd space mobile that we had an interview on there's so many players in this space i think for amazon if you're investing in this company don't base anything

off of kyper if it works and it helps with the business and it helps with pricing power with prime maybe that's a nice cherry on top but i won't think about it as a potential bull case ryan you're a shareholder do you think about it any differently no when i think about my position in amazon i give little thought to project kuiper honestly but you make a good point which is anytime they they're making tons of progress in a bunch of small divisions within their company that are never in isolation most likely going to contribute a ton to the top line or even the bottom line but what they do is all these small bets all these small improvements they bundle it into prime and make it super compelling for customers and that's i imagine

what they would do here as well potentially so if they do that and all of a sudden you can get internet service included once again i i think of all the business lines for amazon which they have some phenomenal businesses i think that subscription revenue line will grow double digits for more than 10 years it can grow steadily for a long time and this was under reported they are doing a netflix style password sharing crackdown which i think could have quite the success given that i'm a uh not using i'm part of a account that is not using it properly. Yeah. I think just about everyone is. I am a third derivative moocher off Amazon Prime, I think, if I'm using that right. There are so much Prime password sharing

that has just gone neglected. So good for them. If they can implement that correctly, they will have probably 50% user growth if they did it today over the next year would be my suspicion. Yeah, that's fair. All right. Other question before we get to EA and then Ackman's letters. Thoughts on Portillo's after the interview? Yeah. If you wanted to, or if you didn't see this week, actually today as we're recording this, we released a podcast with steven aka unemployed valued bgen he has a good sub stack and he had a long pitch on open door which i thought was interesting from a value and you know investors perspective but we talked a little bit about portillo's company that has been a dog for me and why he is bullish on them now i

think after the interview it gave some fresh perspective on why even though i'm getting psychologically hit or emotionally hit by a 50% drawdown in an investment, he makes it kind of just gives some fresh perspective on, okay, look, the stock is cheap. And if you look at these metrics, blank, blank, blank, it is cheaper restaurant and it should do well from here if they can just not have horrendous comp store sales going forward. I like the pitch and I think it may be a little bit more bullish as he came in with some fresh eyes on it. Yeah, I got to admit, after that conversation, I felt compelled to take a startup position. I still haven't, but I would say that's probably-

Got a little FOMO on that value stock. All right. Let's talk E8 buyout. Yeah. I'll say this. I love, and this is probably a bad investing habit that I have, But when people I know that have followed a company really, really closely for a long time, if I'm able to get a lower cost basis than them, I like doing that even though I – You're taking advantage that I bought at 12 and it's at 6. Yeah, but I have no – like I don't have nearly the knowledge on the company or the conviction, but just the fact that I can be like, oh, my cost basis is half of yours feels kind of good. Exactly, exactly. all right let's talk electronic arts buyout an old flame of ours that didn't do well and even i'll say with this buyout still underperformed from 2020 and 2021 uh compared to the nasdaq and

the s&p 500 but this is a 55 billion dollar deal it's funded by saudi arabia's pith silver lake and affinity partners it's the largest levered buyout ever majority of the 36 billion dollars in equity for the deals coming from saudi arabia it's a 25 premium to ea share price deal is 210 in cash. If we look at EA, their stock is up 40,000% since 1989 when they went public, making it around a 400 bagger in 35 to 36 years. If we look at why they did that, good businesses with tailwinds generally win out at the end of the day, even if they make a ton, and I mean a ton, of horrendous acquisitions over that time period. However, it seems like in the video game business, the console business, especially those tailwinds

have stalled in recent years. EA has generated only over $2 billion in free cash flow once in a fiscal year. And in the last six fiscal years, so going from their last one ended in March of 2025, going back to March 2020, they generated cumulative free cash flow in six years of 10.5 billion dollars so would take with this deal undiscounted uh at that rate what would it be about six times five 30 to 30 something odd years for them to get their cash flow back now there's debt you know however you're financing it whatever numbers are putting in there does i just look at this and i think was this a good price to pay i i think andrew wilson and the executive team made a great deal similar to bobby

kodak at activision blizzard to get out at a premium yeah i agree it i throw ea in the too hard pile because i think a gaming and console gaming and not even console gaming you can really throw it in with gaming overall has gotten so competitive. I mean, it's been competitive for a long time, but the barriers to development have come down quite a bit. So it feels like it's become more competitive in the last 10 years. The other part is there is no community of customers that will give you bigger backlash if you decide to take the private equity approach to running this company than gamers gamers will just protest like it's there's no tomorrow i i i think they got a good deal i feel like ea is kind of in no

man's land where they obviously have great franchises but they've just haven't done a great job nurturing them and it's one of those things where you i would have assumed that fifa and the fc brand over the last 10 years i think wow that's got to be what a great asset to own but it just hasn't shown up in the numbers yeah in 10 years a little bit but most of the growth was from like the 2014 to 2017 period the last six seven eight years it's it's not there's not been much what's funny though what's funny though that apparently the saudi crown prince is a large gamer which i think is hilarious and i know that he was just thinking god if i could just own this thing i'll fix fifa i'll fix madden i don't think it's happening man but you know yeah i wonder i

mean saudi arabia has invested a ton in soccer and football and i wonder how much of it had to with affinity for the soccer slash football franchise that ea has which is the by far the biggest and i will also invested piff has invested a lot in video games so i guess this combination made sense they're into sports they're into video games it's the best in the largest sports video game company yeah i still still goes in the too hard pile because i it's so right yeah wouldn't you have thought that there would just be massive margin expansion over the last 10 years they've gone from like cds to pure digital distribution and so much more of their revenue now comes from live services in the ultimate team franchise it i it just blows my mind that cash flow has

basically gone nowhere for seven or eight years anyway yeah let's uh any other topics we want to hit before we sign off letters we got five minutes or so why don't you this is your time why don't should take us through it yeah i read ackman's recent shareholder letter i think it came out in august which is man twitter though 10 000 he does usually want a day on twitter yeah yeah that's true he uh regardless of what you think of bill ackman and there's a lot to well i'm sorry but there is a lot to dislike bill ackman if you're listening because sometimes you get into topics that you shouldn't. You can't – that's true.

For anyone that doesn't know what we're referring to, he basically went on Twitter and gave a whole bunch of military advice to people in government and it just kind of – it's one of those things where you get really good in one subject of life and you think it applies everywhere and I think he maybe took that too far. But he does write a good letter and I will say, If you are an analyst or you're someone wanting to become a professional investor and you want to learn how to write a good pitch, read Ackman's letters because he does a really good job condensing his thoughts and condensing a ton of information into just a few paragraphs for each of his companies. I'll go through his largest positions first and we can talk about maybe since we're running a little low on time, which companies you want to actually discuss and I've got quotes from him on all of them.

so largest position is uber second is brookfield third is universal music group fourth is google five restaurant brands international which is like taco bell and tim hortons six is amazon honestly kind of it's not taco bell but it's burger king i think burger king young brands you're right yeah it's very similar logos the two companies anyways uh seven howard hughes corp eight nike nine chipotle and ten hilton nike and chipotle he's got some struggling brands as of late in there as well any of these that you want to dig into a little bit i'd say either universal music group or chipotle does he is he buying more chipotle because he bought after the salmonella thing kind of just held it for a long time yeah either of those seem interesting everything else

all right let me read you a quote from him on chipotle so here i'll just read this whole thing while some of the basically he he mentions the same store struggles same store sales have struggled lately he says while some of this same store sales weakness is clearly due to overall soft consumer spending in restaurants as evident in the performance of competitor brands which he is right about we've talked about that a lot the onus is on management to adapt to the current environment and better communicate chipotle's phenomenal customer value proposition we fully expect chipotle to return to its historical growth trajectory once execution improves and macro headwinds moderate do you agree do you think there is still a really strong customer value proposition

at chipotle yeah personally no but i'm not everyone i think it's possible that this is macro and they'll get their thing their their comp sales will figure themselves out but they're much more saturated in the united states uh than i think the company is giving itself credit for how many people outside of any decently sized metro area can just say i i can get chipotle fairly easily um yeah it doesn't get me too excited the stock i think are we down to a pe of 30 because if so that's dirt cheap for chipotle uh it is much much closer than it than it used to be i'm not sure on the valuation it does i think 10 15 for a breedable it's fine still a reasonable yeah it's still a compelling value proposition but i think the quality has come down maybe that's

just my personal experience although we've seen reports about i was early on this i've been saying this for five years so uh i'm not i didn't short it it wouldn't have been to get short over that time but all right pe trailing pe 35 forward pe according to fiscal ai's consistent consensus uh whatever bringing the consensus on uh onto the platform 30 nah what gets you excited about that that's gonna be a pass for me yeah what do you think is the portfolio as a whole So I think it's going to get probably close to the market. I mean, a big chunk of this is in Amazon, Google, Brookfield, Uber.

I mean, part of it is his portfolio is so large that he has to stick to large companies. Oh, I don't think this is going to attract the market. You don't think so? No. I mean, it's 10 companies, basically. there are there there's more well yeah there is a few more but there is yeah you're probably right i like parts of it he seems to love restaurant concepts and retail more than i do yeah yeah i i don't he's not the first manager that i like to read letters from even though he does do

a good job of talking about controversial stocks and boiling it down to a few key points but i don't know i think the portfolio is a little boring honestly i do the one thing i think is exciting is he has been right about uber and he's he owns it in size what what's the fund called again pershing square pershing square okay well yeah i mean track record has been solid here's here's a quote that i'll give you from his his thoughts on uber he says uh so he talks about basically the threat of automated vehicles and avs so he says and this kind of i think a lot of people forget that there's been other av players that are apparently well developed in other countries as well so he says recent mobility announcements

include new and expanded partnerships with AVRide, Baidu, Lucid, Maymobility, Momenta, Neuro, Pony AI, Wave, WeRide, and Waymo. He says, over time, we believe that additional data will further demonstrate that partnering with Uber allows AV players to scale faster than they could on their own while maximizing the unit economics of their vehicles. I think that's a fair take. And my belief is that, yes, even in an AV future where a couple companies dominate, a lot of people still go through Uber. They have more active customers in five years than they do today. Yeah, it's possible. I'm not making that bet, though.

No, thank you. Dara's done a good job turning the ship around. That's fine. Probably was. That is fine. Hey, look, but for the general, this is largest position and looks like almost 20% of the portfolio, $3 billion worth of Uber shares. It's done well so far, and I'm sure he knows him and his team know the business better than I do. Yeah.

All right. I think we're running up on time here. We've gone a little long. I can wrap things up here. Anything else you want to add before we sign off? I don't think so. Thank you to the listeners. Thank you, listeners and sponsors.

Questions. Yeah. Come ask us questions every week. We do these live, but the recordings are out Friday mornings. That's right. And thank you sponsors as well. Port Sido, Fiscal AI and Interactive Brokers. Let's hit the disclosure. Thank you everyone for tuning in. Brett and I are not financial advisors. Anything we say or discuss here on Chit Chat Stocks is not formal advice or recommendation. We may buy, sell, or hold any securities discussed on this podcast. Thank you everyone for tuning in and we'll see you next time. Thank you for watching.