Chit Chat Stocks - Stocks With 100 Bagger Potential; $1.5 Trillion SpaceX IPO; Warner Bros Merger Mania $NFLX $PSKY

Episode Date: December 12, 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 (00:28) Major News: Netflix's Bid for Warner Bros. (21:57) Listener Question: Multi-Bagger Investment Strategies (23:51) Identifying High-Potential Asymmetrical Bets (40:50) Analyzing Share Buybacks and Growth Prospects (42:53) Leadership Changes at Berkshire Hathaway (45:09 Speculations on Berkshire's Investment Strategy (47:56) Berkshire's Cash Reserves and Investment Dilemmas (51:24) Rapid Fire Earnings Review: Remitly and Adobe (58:48) Nintendo's Market Position and Future Prospects (01:02:08) SpaceX IPO Speculations and Market Implications ***************************************************** Subscribe to Emerging Moats Research: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

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. This is our weekly power hour episode where we discuss all things financial markets. We do these live on Thursdays at 5 p.m. Eastern time over on YouTube. So if you want to ask us any questions, feel free to do that in the chat. Look us up, Chit Chat Stocks on YouTube. But we talk all things financial markets on these episodes and we have some huge news this week. Netflix is making a bid to acquire HBO or the HBO parent company Warner Bros. And there's actually more to it as well.

And we actually have a bidding war in sort of a surprise bidder, maybe you'd call them, in Paramount. We're going to talk about that. We have a Buffett lieutenant departing Berkshire. We've got Adobe earnings. Lululemon just reported like literally an hour ago. Brett's going to be talking Ferrari. And we have a great question from the audience that we're going to talk about as well. But Brett, welcome into today's Power Hour.

How is everything? What are you most excited to talk about today? I think I'm most excited that I fixed the speed on my Wi-Fi in a new location. So fingers crossed, right, Ryan, that it's going to be strong for this episode. Hopefully, I'm not jinxing it as we are recording. But I'm excited to talk a little bubble watch with, I think, a company that I really, really want to go public because I want to see what their income statement looks like, all that good stuff. And as I'm talking right now, I honestly forgot what I put into my notes. So let's go look back at what we have on the sheet.

But I think we have the note from the listener on the multi-bagger David Garner type stocks, which I think will be a very fun one. We had someone talking to us about Turning Point Brands, which I thought was a very interesting company. People wanted to talk about the Nintendo drawdown, the Remitley Investor Day, which I watched part of it, looked at some of the presentation. So excited to talk about all that stuff. Lululemon just reported.

But I mean, it's kind of the last few weeks of regular earnings before we get into the holiday season and we got to get creative for topics. Yeah, I'm thinking we kick things off with this Netflix news. By Netflix news, I also mean Warner Brothers news, Paramount News, and really the biggest news in all of financial markets this week. We're also going to be talking about Remitly. I see we just got a comment in there. had their investor day we'll touch on that as well but regarding netflix for anyone that hasn't heard netflix friday of last week announced a bid to acquire warner bros in a mix of cash in stock for 27.75 a share prior to this warner bros was trading at i think around 12 a share and for

anyone that doesn't know warner bros the bulk of their value today is in their studio business for starters they have a huge catalog of ip that has tons of i think is has long shelf life so there's a lot of old movies there's shows that could have spin-offs i'm thinking of like game of thrones for example so hbo is under the warner brothers brand maybe you can look up some of the most well-known warner bros movies bread while i'm talking here but they have a huge catalog of intellectual property so it's maybe not too much of a surprise that netflix is making a bid in total this would be a 72 billion dollar acquisition plus 10 billion dollars in debt that they would be absorbing so around 82 billion dollar enterprise value in total i thought when i when i saw this i thought

it was over because warner bros management accepted the bid but then paramount which is led by david ellison the son of larry ellison founder of oracle if i'm not mistaken uh he's leading paramount he said he made a hostile bid to acquire warner brothers discovery at 30 dollars per share now that's slightly higher than netflix but keep in mind netflix only wants to acquire the studios and streaming business whereas there are still the linear channels and paramount is wanting to acquire all of it so it's actually not technically a much higher bid But when I say it's making a hostile bid, it just means it's going directly to shareholders offering an all-cash deal, $30 a share. The deal is backed by Ellison money, so his father's money, Redbird Capital, private equity firm, and debt commitments from various banks.

this which by the way i've seen this whole thing just if you've ever watched the show succession which is a it's a warner bros uh intellectual property if i'm not mistaken uh if you've ever watched the show succession it just reminds me exactly of that anyways they basically part of debate here is what is the linear business worth surprisingly because warner bros thinks the linear business is worth close to three dollars a share and if that's the case then netflix is technically bidding 27.75 plus three dollars per share so you're getting close to 31 whereas ellison came out on came out publicly and said i think it's worth one dollar a share meaning that his bid would be slightly higher there's a lot to talk about here we can talk through valuations whether

or not it makes sense for netflix i guess what do you make of this entire debacle brett would you rather see win this bidding war and if you were a netflix shareholder would you be happy if the acquisition went through okay first i see my video is a little bit off but is the audio okay, Ryan? Give me a thumbs up. Bad. Is it all right? I know the video doesn't look great, but people aren't listening to this to see my face. So to answer your question, I don't know if there's any winner here investing wise. Netflix seems to have to, if they want these assets, which you asked the question, who owns or what do they own? They have Casablanca, The Dark Knight. So some of the Christopher Nolan stuff, Harry Potter, Lord of

the Rings, Joker, Barbie, plenty of other stuff. I mean, it's a long standing organization. But when you look at the price that Netflix is trying to pay here, and I'll shout out the TSOH Investing Research Service, Alex Morris, who covered this, and I'm kind of stealing what he wrote for his subscribers this morning. they're going to be forced to overpay and a lot of the value that's going to be accrued here is probably going to go to existing Warner Brothers Discovery shareholders. Warner Brothers Discovery

is seeing decreasing percentages of time spent on TV and stuff like that and time spent watching on TV in the United States. I think it's like 1% versus Netflix at 8 or 9% so they're only going to have a tiny bit

of time watched but if you're paramount and you have to come in over the top with an even higher bid laden one with debt all these complications not to mention the political complications which could toss things all over the place here

I feel like there's no winner here except the existing Warner Brothers Discovery shareholders which I've been a doubter on this business and anyone that bought the dip I guess you're sitting nice and happy right now I kind of want to look at where they spun off, though, because the stock is at $30. And if I'm correct in looking at when they spun off in late 2020,

if that is okay here, or it might have been before. I can't honestly remember. It doesn't seem like the stock is kind of back to break, even if you bought right after the spin. Now, if you bought under $10 in 2024, four i mean you're making out great here but i think that's the only winner yeah i could see this being good for netflix honestly which is i mean this is the difficult balance with huge acquisitions is most of the time they don't work out but every time it's you can come up with

convincing case for why it would work out which is why the deals get done they are buying warner brothers at or the studio business like netflix would be assuming the deal goes through they'd be paying 25 times pre-synergy ebita which is expensive they're saying it would be post-synergy ebita 14 times we'll see oftentimes those synergies don't always actually materialize tbd but on those on all synergies and i'd be curious to know what those synergies are but there is there's certainly a case to be made of if you just integrated hbo and warner brothers ip into the netflix service it improves the value of netflix there's probably some price to be taken there they've said that they'll leave hbo alone as a standalone app and it's funny all the people

that are like this is anti-competitive and it's not i'm not saying it isn't but you have so many people making that case that this is terrible like it's you know it's bad for competition and i i told my girlfriend about this deal and she's like oh that's great i won't have to pay for two services now it's like oh yeah i guess yeah but what if it costs forty dollars in five years that's i think i what maybe it costs forty here here's what i would say if it costs forty dollars in five years you don't have to pay for netflix that's true that's true you can watch anything it's it is one of the most competitive industries out there really that's fair entertainment time spent at home yeah they're fair you're right and i love the idea i everyone's

talking about well when i say everyone i just basically mean a lot of the politicians that don't like acquisitions of any form yeah uh they're saying youtube doesn't count how does youtube not count number one it is it's number one you see the u.s streaming tv market share and it's not only number one but growing it it's super competitive like let's say this would take netflix's tv time spent from eight percent to nine percent are we really considering blocking deals for that are you like are you kidding me uh it seems ridiculous but i i think you could make a case i think as a customer of both services i would not mind netflix acquiring this as a shareholder i i worry that things could go wrong but there's definitely an upside case for pricing

power plus any synergies as well cost synergies stuff like that but they can't they can't mention those because if they mention pricing power that's going to get quite anti-competitive it's pro consumer now we have a comment here from tyler in the chat saying netflix should take 2.8 billion dollar breakup fee and let paramount suffer under the 80 billion dollars of debt it could net let Netflix licensed content for cheap a la Warner Brothers Discovery over the past year. My conspiracy slash galaxy brain take is that Netflix is not in it to acquire Warner Brothers.

They understand the entire situation here and all they're doing is, like you might in a fantasy football auction draft try to bid up the price to a higher one. You're not actually serious about acquiring these assets, but you would like the other person to pay more and if they do the corporate structure might leave netflix in a much more competitive space to use their healthier balance sheet it's quite ironic that they used to be called netflix when the rest of the industry is in much worse shape today

but they're using that positive free cash flow to take advantage of their position maybe take on some sports rights when there's not that much competition out there anymore whatever they've been trying to do to expand live stuff, all that good stuff. And that can get them in a better position. And you get $3 billion. Maybe that's what they're after. But if I was a Netflix shareholder, yeah, this is not great. And I think it's the reality of the growing YouTube competition, which should be the number one fear you have as an investor. That would be the one thing that it keeps Netflix from not being a monopoly, but the true dominant player in TV watching globally yeah strategy had some good write-ups on this whole ordeal and it's some of

the stuff that would really excite me is that like with the distribution advantage that netflix has all this content gets watched far more like you've seen situations where shows are not watched at all and then they license it to Netflix and all of a sudden it becomes one of the most popular shows in the world. Oh yeah, TSOH had some great data on that as well. Printers did the exact same thing. He talked about how they put on,

Warner Brothers stuff, Sex and the City, and well, maybe Suits isn't Warner Brothers, but they put them on basically 10x, 100x their watch hours. That is quite the advantage over the competition. yeah and there is also something to be said for when you look at youtube versus netflix just longer shelf life content existing on netflix youtube's much more i mean we experience it not a lot of people are watching our youtube videos from two years ago whereas i i'll gladly re-watch an hbo show or a netflix show

yeah but they have to pay for the content youtube we're talking business model they might still be superior yeah it's here's my take oracle stock drops i think like 10 today off bad earnings yesterday maybe not bad earnings but just a extreme capex situation i think david ellison's going to have to randomly pull his bid for some weird reason because dad's not going to give him this much money yeah no this stuff is not a public but what i will say is people should watch out for the debt levels across the entire ellison family empire oracle is laden with debt paramount is laden with debt they're in the debt uh i think they're within the twitter ownership group there's

other stuff out there where if oracle stock does not perform well you could get into a situation where there's a lot of related parties here that may not have the firepower that they think but who knows it might not be even close to that and maybe that's why the the credit default swaps on oracle are rising who knows people are kind of wondering why that's occurring it's kind of outside of our purview but i think it's a fascinating story are there any things that i want to invest in this space no i mean netflix is expensive nothing else i'd want to touch feels like a fun story it's succession in real life but are these good stocks to buy at this moment no i don't think so if netflix continues to drop because of this i could be interested

Because I don't hate the acquisition if it goes through, but if the stock drops and the acquisition doesn't go through, they're getting a breakup fee and it's still just as advantaged of a – Paramount owning this business does not impact Netflix's advantage at all. They will still be just as competitive, have just as good of a distribution advantage, just as much great content that they currently have. So I will probably continue to keep an eye on Netflix shares. So where are we at now? What kind of earnings ratio? I'll pull it up on our friends at Fiscal AI. Do you know what that earnings ratio is looking like? I would guess 30s, mid-30s.

you're gonna be disappointed 39 trailing a 12-month price to earnings if we want to look at price to free cash flow on trailing is 47 although they do have you know slight capital intensity as they grow and invest into content that still does not excite me with the youtube competition no i mean youtube's a beast of its own but no i i'm gonna need it a lot cheaper before i i probably get interested there but we'll see where this goes i assume we're gonna have more news to talk about next week when we record again so that's true we'll have to do an update we'll have to do an update on that okay if you one last question if you're a warner brothers shareholder which offer would you prefer hire one all cash i guess i i forget

the details you should get me out these are these are dying businesses get me out i mean you can either get 28 a share roughly with netflix and then you're left with whatever the linear networks are worth then you can sell it for three dollars a share or you could take thirty dollars all cash from paramount but you get rid of the whole thing yeah i think i just get rid of the whole thing just get rid of the whole thing but you can also sell right away right the the stub of the streaming either way i mean no big deal just get me out of this thing i don't want to call it a bailout because the people that got into this when it was discounted versus the ip value congratulations you were correct but i still think over the long term this is a business that's

treading water running on the treadmill to go nowhere and you got rescued from the lifeboat agree or disagree okay now i think it's a save but there is i mean yeah the ip is worth something ip has value and it's a good lesson for nintendo shareholders for that's right you're speaking my language like it's so many of those things don't get accounted for in like if it's just publicly traded on its own but if it is a potential acquisition candidate all those all of a sudden those things have a ton of value the the intangible assets and i will say uh we're not going to talk full nintendo yet we might not get to it this episode the current enterprise value for nintendo

is below this offer if you wanted to be intrigued and you think those assets are worth more and maybe take a look at that business. If you're a regular listener to Chit Chat Stocks, then you've probably heard us talk about interactive brokers. Here are three reasons that interactive brokers is better than any other brokerage platform. One, they've got it all. Stocks, bonds, ETFs, options, crypto, you name it.

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I would say join the Substack chat. It's the free newsletter. It's all part of the podcast. You can ask questions. I basically every week ask, what should we talk about at the Investing Power Hour? People comment. I think we had probably like a record number of comments this week. We had probably 50 messages back and forth. So it's going, if you want to ask us for things to talk about,

if you want to give us anything that suggestions for the show, let us know. You can sign up for free for that in the show notes. But a listener named JF had a fantastic question. I'm just going to read what he wrote. Podcast idea. You made episodes about David Garner and it left quite an impression on me.

I have a core portfolio that'll quote unquote do the job, but I'm considering from now on to put every new, I'm not going to say the amount of money, he said a small amount of money for his account, add it to my account into new high potential ideas, asymmetrical bets, if it works, equals multi-baggers. These are for companies that are harder to value right now, maybe aren't profitable,

but the idea is if you already have a core portfolio set up and you could allocate a few small positions for potential multi-multi-baggers, what would you pick? Not talking about a stylish blue chippers that could return 12% to 16%, but the idea is they go 25, 50, 100 baggers if they pan out.

You made a note here, Ryan, that 16% a year over 30 years does get you to 100 baggers. So if you're patient enough and that's your hurdle rate, that might not make a difference. But I think it was a fantastic idea. essentially the rule for this and we'll maybe just pick three each i have a couple i have four

listed that i wrote down as stocks you would allocate a small position in your portfolio relative to the size maybe less than a one percent position with high risk high reward motley fool rule breaker style ryan before we get into it any thoughts any questions do you have companies in mind and you own any type of these in your own portfolio i think so yeah i think i do own some the i love the question and even though i shouldn't maybe think this way i kind of group them similarly like what's going it's just basically like margin of safety like you don't i don't want an entire portfolio full of what i think could be 10 20 times larger because there's there's just more risk generally with those business models

the thing i was probably looking at here like what how do i qualify a company as something that could be a just moonshot 50 bagger versus an established company to me it's how big you start to care about addressable market that that's something that comes to mind for me is like even though they might have a 10 shot of capturing a good chunk of their market if the market is big enough that's kind of what i end up focusing on and i think that's sort of the gist of what he was trying to look at too how do you want to do this you want to compare contrast names draft how do we want to i guess we can just go back and forth i don't think we're going to have the same ones, but I'll go first. And the way I looked at it is just super high opportunity,

super high upside, smaller company, one that I think some of them I do own have in my portfolio has a huge potential upside, but obviously there's a lot of downside as well. And the first one, and it's one I've covered recently, I have it on the watch list and I really hope, I have my notes written down and writing here. I hope that it falls 50, 60. It has a big drawdown because I think the runway for growth for its niche sector is super undervalued. And that is Kraken Robotics. Company has a market cap of, I think, a billion plus dollars now. I haven't followed them too closely. It's kind of brutal if you look at their earnings reports, because I'm very confident in their growth trajectory, but I just don't like the valuation. I think they're

trading in something like 10 times sales, something like that. But I believe they can 10X revenue. They have a huge opportunity here and they're pretty much a monopoly. So if you want full details on that, I did a full podcast research into them, about an hour long episode also did. And it's fully complimentary on the Emerging Notes website, a research report on that, which you can find a link of in the show notes. Ryan, do you think that fits the criteria? Yeah, I think that is basically the type of company that he would be talking about. For me, of all the companies I own, what do I think has the most multi-bagger type potential? It's probably Remitly. Talked about that company a number of times. it's i think it could be a really big remittance provider uh and it's kind of priced like a really

struggling company and it just doesn't seem to be the case although in the last week uh things have changed a little bit i think it's up it's up 15 percent yeah yeah nothing like a good investor day pump uh which are almost you have to spoon feed it to wall street sometimes but yeah yeah That's how it goes. Someone in the comments mentioned HIMS. Don't know if you picked this as well, Ryan. It makes sense. Gigantic addressable market, great growth, great gross margins, but a lot of uncertainty. I didn't put Remitly on this list. I guess maybe I have some riskier ones than Ryan's portfolio, but I'll go with my second one. This is one I do own. I think it has a huge potential addressable market. It's growing incredibly quickly,

but there is some competitive risks out there. They, I don't believe, are profitable on a gap basis although they're free cash flow positive and their margins are not that great right now as they try to build out all these new products. It is the real brokerage, the cloud-based brokerage that's growing a ton. It's taking a lot of market share

but I think the market cap today is below a billion dollars And if they hit and dominate this industry, I think it could easily be in the 10s, $20, $30 billion market cap range. It's one I have a small position on. But, yeah. If it works out, it's probably going to be a 10-bagger. If it doesn't, there's probably some downside from here.

Yeah, I think, I like that one. I like the HIMSS call. It's not, I have some... I don't know, red flags, yellow flags with him's management team a bit. I think he carries maybe a little too much. Sometimes you get that with disruptive businesses, though. David Garner would say you got to take it with the fits and starts, if I'm saying that right. Yeah, it's a good example of a huge address market, controversial, potentially misunderstood business model today.

So I would agree there. The one that comes to mind for me is – and it's already a fairly large business – is actually Grab. This is one where they already dominate kind of the Uber of Southeast Asia. But if they do continue to win in their other markets, like financial services, banking, grocery, food delivery, and continue to grow their market share even with rides as well, it's hard to see them not being a much, much bigger business. and i do think i think there's sort of some ancillary businesses that they can enter as they get as they continue to grow like if they dominate the industry it gives them a lot of chances to strive for other business models i mean this is like amazon right where i'm not comparing grab to amazon that's not the intention but if you looked at amazon in 2000 i don't know

2008 you probably would have said it's already the largest e-commerce provider i would guess like it feels like there's maybe some saturation or it's close to like it's addressable market but there there was a good quote from i think it was brad gersner who i don't love but it was a good quote he said great management teams always find a way to expand their tam and when you're a really good when you already have a great business and you've got a innovative management team i think you tend to find new industries that you have success in and i could see grab being one of those yeah the only i looked up market cap 21 billion dollars that maybe won't be a hundred beggar from here but it's still this hat you know not not everything has to be a hundred beggar and

And that also gets back to what is perhaps underrated for 100 beggars is capital returns. A lot of the 100 beggars, the number one 100 beggar stocks from the 20th century, all tobacco, pretty much tobacco and CPG. They're the top of every list. I think five of the top 20 of 20th century stock market returns are all companies that are a part of Philip Morris International at one point or RJR Reynolds. It's pretty funny.

But they weren't all just hyper-growth. I mean, they stopped growing in the late 60s. It's capital returns, buybacks, good capital allocation. That's how you go from, I mean, this kind of, oh, AutoZone, year 2000. This market cap's sizable. Is it really going to be a hunter-beggar? Well, yes, if it's perennially undervalued

and they just pound the buyback. sure it can on a long enough time horizon yeah yeah it's true i think people underestimate there's a lot of hundred baggers or multi-baggers i should say where it already felt like a mature business but they could grow seven to ten percent on the top line and continue to improve margins for longer than people thought as opposed to having whatever tripling revenue in the next year kind of thing one more that i'd call out i'd like some of the latin american companies uh new bank's probably one i'm not sure on the size i actually it's pretty big yeah it's kind of sneaky big ryan yeah but i agree with you it's got a lot of hyper growth potential here's one

that you actually covered, I think, on a small cap of the week one time, which people want. They ask for the small cap of the week. They want it back, Ryan. And this is one that you covered that has pretty nice growth. It's actually a bit of a rough patch

on the growth trajectory, maybe when we jinxed them a little bit. Do you remember Raspberry Pi? The little computers, revenues of 38% CAGR since 2015, 12 million USD to 250 million. I'll read the overview

on Fiscal Day because I totally forgot what they are but I actually used them in college a little bit. Raspberry Pi designs and develops single board computers and compute modules worldwide. It offers computers and microcontrollers, cameras and displays add-on boards, power supplies, blah blah blah so it's kind of for DIY people

or people in labs building things people in testing facilities, engineering product design teams, stuff like that i'm in three year revenue gagger 23 pe right now is 90 but i assume that they're over or under earning because the evd sales is three evd gross profit 12.9 market caps below a billion dollars so you know it seems fascinating maybe the right price i actually i still have the small cap of the week's list uh of companies that i did what do you think of all the small cap of the weeks is the highest or the best performing over the last three years uh dave is it dave is correct

dave yeah can you guess number two not raspberry pi because i'm looking at this stock chart and it is not pretty turning point brands maybe you never covered that no no uh kraken robotics that is a good well yeah we covered them i i covered them a long time ago and i just was like it's outside my circle of competence well here's one that i have as my honorable mention it's one that if i wasn't it would probably be 10 of my portfolio if i made that one percent position back in May of 2024. I think Ryan might know what I'm talking about. Someone we've had

Simon Erickson on the show before. And I know you probably don't follow the company closely, but it hits $65 a share. It's vastly overvalued today. So I wouldn't put it on this list right now, but it's Rocket Lab. I was looking at it at $4 or $5. It's a good risk reward. I mentioned this before. Now it's at $65. I think the price to sales is like $50. There's a ton of risk with that business but back then that was a good example of something like that yeah yeah that is a good example the i'm looking i'm looking through the rest of this list and there are a lot of major drawdowns uh wag group was like the dog walking platform that's down 99 it's kind of you You know, you hit a couple of home runs and a lot of losers.

Yeah, but exactly. If you invest in all of these, I assume the home runs would account for more than offset your losses. But the third best performer, SoundHound AI. I honestly don't even remember what they do. They do, like, yeah. They do drive-through, basically, automations. I read about them in The Motley Fool because AI gets clicks right now. it's it's growing quickly but it's

unprofitable okay and then number four is hate group nice oh that's another one that we should have we should have looked at probably a little too worried about the margin of safety seemed like a pretty good business yeah got all the Swedes one of our top audiences I should say shout out to our wrapped I think we

had over 2 million minutes listened to this year so thank you to the listeners And I think that's just on Spotify. So across the board, even more. And our top countries, obviously, US, Canada, and United Kingdom, but four and five, Sweden and Ireland. So punching above your weight if you're Irish or Swedish. So thank you, guys. All right. Any other ones, Ryan? All right, folks, before we move on, we need to tell you where we get our 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 in our podcast. 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 the largest company-specific segment and KPI data set on the internet. That includes metrics like Duolingo's daily active users, Oracle's backlog, Rocket Lab's revenue per launch, and literally millions more data points. They've also got earnings call transcripts, ownership data, equity research reports, and much, much more. If you want complete financial data at your fingertips, you need to check out Fiscal AI.

And if you use our link, fiscal.ai slash chitchat, you will automatically get two weeks of Fiscal Pro for free, no card required. If you want to upgrade, our link will also get you 15% off. Again, that's fiscal.ai slash chitchat. The link will be in our show notes. Well, one that's going to come out next week, a deep dive on. I'm a little teased here. I think money.com could fit into this bucket. And I think there's – software is crowded, so it's a little hard to assume like a really strong growth rate for a long time, but it's $6, $7 billion enterprise value today.

You could see a world where this is a much bigger company in the future. I would even say the same thing. What's the right capital allocation? Yeah, and you got to zoom out. Like, I'm looking at Figma here as well. Figma valuation doesn't make any sense. I could see a world 20, 30 years from now where Figma is 50 times larger, revenue-wise. But if you're paying 50 times revenue, obviously, it makes it harder for you as a shareholder to generate those 50-bagger returns. Yeah, exactly. I'm pulling up for the quintessential SaaS company, Salesforce. They went public in 2004, maybe? Something like that. Either way, this is as far back as the chart goes on fiscal AI. It has compounded at total return, which I don't think they paid dividends, so it doesn't matter, 21% over 20 years. you can get that at the right price for a perennial market share taker,

pricing power, wide moat SaaS business that becomes the leader in their space. So yeah, I think that could make the list. Yeah, and if I were a Salesforce shareholder for the last 20 years, I would have complained about capital allocation the whole way. That's true.

Well, they could have 30% CAGR if they're a little bit cleaner on some of the stuff. maybe who knows yeah all right let's shift gears a little bit unless you have any more companies portillos maybe that just came to mind that's an ugly one come on they're gonna get a thousand locations right is that good for the business though if they do hit that yeah yeah thousand locations really high avs i it's pretty cheap today i think in the and if the optimistic scenario that could happen but it is high risk high reward someone says here paypal is a potential

share cannibal yeah i don't think paypal will have the top line growth to be a true true multi-bagger they need those doubters because they they want us to doubt them because if it's true they can they just keep buying back there's so many headwinds facing that business like okay even if you look at the share cannibals that did well the auto zones o'reilly's there was no apple yeah yeah it was a boring simple business with a huge reinvestment runway and not not very formidable competitors like you had your mom and pop auto parts shops but you didn't have like competent operators other than o'reilly and auto zone trying to do the same thing, scale the business. AutoZone had major cost advantages. I do not think it's apples

to apples here. It's an example of the super investor we just studied, Chris Hone, which people seem to enjoy that episode. So thank you guys. We did a lot of research on that one. He talks about dividing up not just your competitive edge today, but your risk of disruption within your sector. Now, if you look at AutoZone, whatever technological stuff people are working on, whatever the VCs are working on, whatever all the smartest researchers, science labs, what have you, all the smartest young people are working on, it's not auto repair shops and not auto repair shops, auto parts stores. It's not that. So your risk of disruption is quite low. PayPal, on the other hand, there's fintech disruption every week that

comes out so that would be the difference i'd say between an auto zone risk of low risk of disruption paypal high risk of disruption or replacement from some novel new idea that totally changes your industry yeah yeah it's a good a good point let's did you hear about this news i assume you did todd combs is leaving berkshire hathaway for jp morgan there wasn't a ton of really concrete information on this but combs who is for anyone that's unfamiliar the investment manager who buffett hired in 2010 a lot of people saw him as sort of his protege going to become one of the big like capital allocators essentially investment managers for berkshire i think is what a lot of people thought he'd be along with ted weschler he is

taking a new job to head up a new investment unit at jp morgan and be a special advisor to jamie diamond the new uh infrastructure investment fund right direct investments they're making do you remember this the national security one yeah i think it's something regarding that uh something something along those lines what do you make of this like do you think there was a falling out at all like do you think there's any chance that returns maybe well yeah i mean he's been running geico for the last five years so not great maybe she was just tired of it i guess or felt like he had done all that he could maybe there's some risk that he doesn't get on very well with

the new ceo to be well the new ceo to be is probably looking at geico and going i mean this is our worst asset like they're losing so much market share to progressive uh greg abel yeah yeah it's yeah i mean they have lost market share but in todd combs defense they were losing quite a lot of market share prior to him taking the reins and he if i remember correctly he was like the guy in the air saying we gotta get into telematics we gotta be early to this like that's fair and geico was way too late and that's i think that's why they put combs in charge but is there any investment takeaway for you here like is there any worry in your mind

that like do you think berkshire is losing an asset in todd combs i'd be more bullish i think using sports uh headline todd combs overrated we're going to debate it for an hour uh i kind to think he's overrated. You look at his returns and weren't that great and not that long of a track record. Do we know how well they've done him and Ted under Berkshire? No, we don't have the exact figures.

But looking at the 13Fs, there have been some real stinkers. You have SiriusXM. Ally Financial hasn't been great, especially where they bought. Do we know who chose those?

It's likely one of them. So flip a coin. Could be Todd, could be Ted. Todd is probably Ally Financials since he's a financials expert. Yeah, I think he might be overrated. There's a lot of... Hey, we bought Ally too. Not at his price.

They bought it like $50. I don't know what he bought it at. Yeah. Yeah. Hey, I'm not the one that says I should be working for Buffett. So I think compared to Ted, his track record audited is not nearly as good. Ted is the one with that Roth IRA that'll make you go, All right, this guy's legit. He's done it for 20 plus years. Phenomenal stuff. Todd, what's the track record?

Buffett did say at one point that one was overperforming the market one was underperforming the market maybe Todd was underperforming he saw that Buffett likes him but he hasn't done well at Geico the returns might not have been that great maybe when Buffett leaves

and is leaving it's quite the coincidental timing he goes, eh, Abel may not be a big fan of me a g jane might not be a big fan of me maybe it's time for me to get out of here and to be clear this is all speculation they may have phenomenal relationships but yeah it is the timing syncs up obviously uh david wilson in the chat says never understood why berkshire didn't use their cash in 2022 what are they waiting for yeah now they have their highest cash as a percentage of total assets that they've ever had or not maybe not ever because they've got a long history but in the

last 20 years i think it's at let's see if i can find it here but yeah you had a good tweet on it it was like 30 i think i saw your number was like 30 something like that of assets yeah i'm pulling it up now it's 400 billion dollars it's quite 400 billion in cash it's like yeah 31 of total assets which is the highest in 20 years that's crazy they have the most assets in the world what what could they do with that money honestly it's we got a comment what would you do in no situation just own treasuries for the time being yeah and those are coming down interest rates keep falling uh tyler in the chat says if you were able would you special dividend out the cash and securities to shareholders i think that's a reasonable

idea maybe 100 billion nice little smooth 100 billion out to shareholders there was a time and place when i would have said dividending out the cash doesn't make sense because i'd rather buffett invest it than myself but when your investable universe shrinks as much as it has for berkshire because think you know they they have a much smaller pool of companies that they can invest in when you have 400 billion dollars you can't go digging in microcaps i mean you can but it's not worth your time all right 100 billion in amazon or 100 billion in special dividends well i'm an amazon shareholder here so i might take 100 billion in amazon

they can buy stuff they own a little Amazon why not 100 billion yeah I mean that's fair they do move the price of things though alright yeah it would take a long time

to get into that position and unfortunately if they bought a big position it would go up a ton so you're right on that they can buy 100 billion worth overnight it does become an issue like size has become probably one of their biggest issues like they cannot get they could not put a hundred billion dollars into amazon i'm guessing at the price they would like even at today's price because as soon as people figure out what's going

on it's going to get bit up yeah that is fair yeah it's a good problem to have and And not really something that fascinates me. I don't care for owning Berkshire at this size. If you are right, though, why not just special dividend it out? Got a bunch of value investors out there. Maybe it'll help some of my bag holdings get some cash out there. People can buy some dirt cheap stuff. Yeah, we have a comment here that says they should be like the Norwegian Wealth Fund

and own about 1% to 2% of all companies of the biggest companies in the world. that's just like an investment fund or index fund though and people that's not what berkshire wants to be but i get the sentiment all right let's shift we want to do another topic right yeah what do we how about we go rapid fire on some of these earnings we got adobe we can call remitley's earnings even though it's investor day you want to kickstart with uh remitley sure so they had their IR day. Stock's been surging a little bit. I'd maybe call it a light surge. That might be a bit over-exaggeration there. I think it's up about 10% to 15% this week. Listeners, we're asking what we think about it. I watched part of the presentation. I will say I like listening

sometimes or watching because I want to see... I know this is just vibes, anecdotal stuff, But I want to see what the executive team is made of. Like, are they just kind of scared all over the place? Or are they professionals? Do they know what they're talking about? Do I think they're the right person for that role? And Oppenheimer, who was the founder, he seemed like a founder. He's kind of a bit eccentric.

You know, someone that definitely didn't rise through an executive branch. He started this business. You know, he said he had all the international travel that inspired him to start this business. But I thought he had a pretty clear vision of what they want to do. Grow the remittance business and expand to new services

for international money transfer customers, basically financial services. And there's still a lot of runway and they gave a lot of data on that. But when I look at, I haven't gotten the CFO yet, but their chief, I think it's either business officer or chief operating officer was highly impressive. I just, he was just sharp talking about all the numbers they care about, all the corridors they're talking about, how they market specifically to customers, for example, like, oh, we're going to market in Los Angeles to Hispanic customers, and we're going to do all these specific things that, you know, either billboards in certain areas, TV shows that, you know, are very, basically anywhere where Hispanic people have a high market share.

we are you know our large percentage of the demographic of the customers we're going to be there and we're going to have specific advertising with people that look like our customer base so i just thought it was very smart way blows what anything anyone else is doing out of the water and besides that i don't think my thesis has changed at all it kind of unveiled a lot of things i was speculating about which that was quite nice so they gave a lot more granular data there as Ryan sharing, which I'm having trouble seeing, but it's a long-term guidance. What are the numbers that they're showing there, Ryan? Yeah. Sorry if it's a little fuzzy. They are expecting, this is their 2028 outlook, $2.6 to $3 billion in revenue, which that's great growth

if that's the case and i would guess by the way that that that single figure 2.6 to 3 billion range is probably what drove the majority of the gains over the last day that's fair yeah 22 to 20 adjusted ebitda margin so they're guiding for 575 to 600 million dollars in adjusted ebitda by 2028 so what is this two three years out six if they get to 600 million dollars in adjusted EBITDA I don't think the current what is it two billion dollar enterprise value makes a whole lot of sense uh let's look market cap what is the market cap or enterprise value market they do have a lot of cash on the balance sheet they are pretty bad on the SBC so take that adjusted EBITDA knock it down a peg but three billion dollar market gap two and a half billion ev yeah pretty

pretty dang cheap if you ask me pretty dang cheap all right we said rapid fire ryan you go you do one okay let's talk adobe real quick earnings were good so adobe reported earnings yesterday as this recording wednesday they beat on the top line beat on the bottom line the thing that stood out to me and sort of the thing i track probably the most to get a sense of well there's other leading indicators but to get a sense of are they being disrupted on the digital media side because that's kind of where they're being called into question the most is can ai and some of these other tools like figma and canva put a dent in adobe's digital media business so i look at a digital media arr added so how much arr did they add to the digital media segment each quarter

this quarter they added 610 million dollars in arr to the digital media business that's the best sequential increase they've seen in two years roughly here i'll share my screen like that is almost they almost added an entire figma in ar growth this quarter that and now obviously revenue a lot of that can come with price increases it might not be exactly usage per se which is where i think people are questioning their moat but they also mentioned and this is a quote that stood out to me from the conference call it says we are growing our base of creative users across Firefly Express, Premier Mobile, and other freemium offerings.

MAUs for these offerings surpassed 70 million in Q4, growing over 35% year over year. They talked a lot about the freemium business, which is where I think people don't really question that they have a good enterprise business. That's the majority of their customers' majority revenue. But they think some of the lower-end solutions are eating market share like Canva

because they cater to kind of that freemium audience. And I think you saw Adobe focus a bit on it this quarter. So I like where they're at. They're still buying back a ton of stock, $2.5 billion this quarter. They've spent $11.3 billion on buybacks over the last 12 months versus $9.9 billion in free cash flow. So still spending basically all of their cash flow on buybacks, although they made the acquisition as well. It seems like the thesis is still intact here. If they continue to grow 10% of the top line quarter after quarter, eventually I think the sort of skeptics will just subside maybe. We've almost got a 10% free cash flow yield before including stock. Yeah. Including stock now?

No. Let me double check. I'll get there. All right. You look up that number, and I will talk Nintendo briefly. People wanted to mention this stock drop. The bet as a preview for our predictions for 2025. It looked like I was going to get there to Nintendo getting to $30 for their ADR,

but we've had a rough couple months. it's back down to $18. Ryan, do you have the number for Adobe before we get into it? I got to custom metrics this, so give me a second to build the formula. All right, all right. Well, this is going to prove how good fiscal AI is,

but that lets me go into my Nintendo notes. So the stock is dropping because they're heading into the holiday season and there's rising chip costs for whatever they need. I think it's DRAM. It's NAND, some sort of semiconductor that they need for the Nintendo Switch 2,

and the costs are soaring for that. People are saying, oh, their earnings are going to drop, blah, blah, blah, blah, blah. And that's brought the stock down, I think, 10%, 20%. Now, the enterprise value today is down to $70-ish billion,

and this is a business that can reach, I think, on that figure, 10% earnings yield. I think I'm going to be increasing my position here. We're seeing a huge, They're raising their guidance on the number of Switch 2 units they're going to sell through. They are putting out a movie pretty much every year.

They have the theme parks that are going to be basically fully open globally here shortly. And when you have that, you have the reinvigorated, basically family-friendly gaming content. Seems like the popularity of Mario, Pokemon, Zelda, everything is not slowing down whatsoever. and you're at a 10% earnings yield with that, look at Warner Brothers. Apparently it's worth $80 billion plus. What is Nintendo worth? Probably $200 billion.

These are significantly more valuable. I'm not selling my position and in fact, I probably will buy some more. I agree with the thoughts that I captured there, although i've been a little busy here putting together a formula so just here's a quick shout out to fiscally i they've got free cash flow they've got stock-based comp they've got market cap they've got all the fundamentals you need and then the custom metrics allows you to just build basically any formula using their data free cash flow minus stock-based compensation yield

is 5.4 percent so it's no it's not close to the 10 figure uh but you've got basically call it 18 19 times free cash flow including sbc for a business that should be able to grow the top line around 10 and hopefully uh 15 at least eps uh cagger given the buyback pace at the moment sorry i interrupted you on the slots there but i finished that's it that's that's that's it um yeah nintendo's cheap that's that's all i gotta say i'd say that's been every podcast for the last year nintendo's not the middle of the summer i don't think it was it was it got up to like a hundred billion dollar market cap at that point but beginning of this year and now i think it is cheap. There was kind of the surge when the Switch 2 came out. That's fallen off. The yen

depreciating is also not helpful, but I can't control that. Have you heard, this will put this to end here maybe for the bubble watch, are you ready for a SpaceX IPO and the space and satellite and literal moonshot bubble that is going to happen if this actually comes down the pipe? Did you see the news here or should I read the quote? Read it. I did see it, but go ahead and read it. All right, listeners, you probably saw this is quite viral. Quote, SpaceX is planning to go public in mid to late 2026

and is looking to raise $30 billion at a valuation of around $1.5 trillion, according to Bloomberg News. That would make it the largest IPO of all time, edging outside of your round-coast public listing in 2019, which brought in $29 billion. It would be a reversal for SpaceX, which was previously considered spinning off its Starlink division for an IPO while keeping the main company private. I think they're only supposed to be doing about $20 billion in revenue this year, or less, maybe $15 billion. This would be quite the expensive sales multiple for a capital-intensive business.

Let me just put it that way. It could spark a bubble. i like the starlink business but that's an insane number and it's not like i would guess they are burning a lot of cash why do you think they want to raise 30 billion wait it's 30 billion at a 1.5 trillion dollar like they're they're offering so few shares at that valuation. Yeah, I think for a reason. They're already worth, I think, over $500 billion.

I have a feeling, and Elon Musk is very, very good at timing the capital markets. I have a feeling he sees that the ducks are quacking to use the analogy, and he wants to feed them. The market could eat this up. He could raise $30 billion. dollars it would yeah maybe he's also highballing it to then come back down to earth no pun intended but yeah we'll see that's a wild Tyler's got a good comment in the chats here before we wrap up

says alphabet's going to end up with a 100 billion dollar unrealized capital gain on their spacex investment. They own a stake in SpaceX. If you were Alphabet and SpaceX went public and actually got more than a trillion dollar valuation, would you begin selling your shares?

Alphabet or SpaceX? Sorry. If you're Alphabet, you would sell your SpaceX shares? Yeah. It's a wild valuation. You have to make some crazy assumptions. People have been hyping up the space data centers. This sounds...

I feel like an old man. Space data centers? You can barely get a couple satellites into space. What are we going to build data centers up there? Oh, man. It's an exciting time, isn't it, Ryan? Yeah, I think that's going to do it. Unless you've got anything else here, Brett.

I do not. Fun episode. Thank you, everyone, for listening. I felt like we had not even that many topics. We couldn't get all of them. Apologies for not getting to Turning Point Brands. Apologies for not getting to Ferrari. Apologies for not getting to Lululemon.

We'll maybe cover them next time. But as a disclosure, we are not financial advisors. Anything that we say on this show is not formal advice or recommendation. Ryan, I, or any podcast guest may hold securities discussed in this podcast, may have held them in the past, and may buy, sell, or hold them in the future. Thank you, everyone, for tuning in. And we'll see you next time. We'll be right back.