Chit Chat Stocks - The State of AI Software; Tesla Robotaxi Launch: Hims & Hers vs. Novo Nordisk (TSLA, HIMS)

Episode Date: June 27, 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: (03:38) The Evolution of AI and Its Impact (08:10) Identifying Opportunities and Risks in AI (12:42) The Future of Equity Research with AI (19:08) Market Reactions and Business Models (25:58) Hims and Hers: A Case Study in Market Fragility (34:08) Constellation Software: Investment Insights (40:27) Understanding Human Incentives in Business (45:13) Abercrombie & Fitch: A Brand Revival Story (50:24) The Future of Autonomous Vehicles and Robo-Taxis ***************************************************** 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  ********************************************************************* Bluechippers Club is a tight-knit community of stock focused investors. Members share ideas, participate in weekly calls, and compete in portfolio competitions. To join, go to ⁠Blue Chippers and apply! Link: ⁠https://bluechippersclub.com/ ********************************************************************* 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. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chit Chat Stocks is a CCM Media Group podcast. Anything discussed on Chit Chat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. welcome to chit chat stocks today we are joined by co-founder and ceo of fiscal.ai formerly fin chat if you are a regular listener to these shows you know that they have been a sponsor for a long time also my employer and just an all-around fantastic platform to use for financial research we are also joined by the one and only brett schaefer but brayden it's been a

while since you've been on the show welcome back oh it's good to be back boys i uh appreciate it this this is live right we're live this is live this is true yeah live recording we only got a few people that join us live a lot a lot more people listen to the actual recording but yeah we should get a few comments in here and very happy for you to join us i know you have plenty of experience in the podcast game as well so excited to have a fun chat you don't need a audience it's better to be well known or sorry it's better to be known well than well known i i strongly believe that i like that and we will uh we're going to dig into some get a little uh expertise on the ai industry from brayden but before we do we want to talk about our friends

at ibkr interactive brokers uh we were so genuinely excited when interactive brokers reached out to us because we were already using the platform and Brett and I loved it. The reason Brett and I chose IBKR as our trading platform is because unlike other brokerage platforms, IBKR does not cut corners. Here are the four things that made IBKR the perfect fit for us. One, they have zero commissions on US listed stocks and ETFs through their IBKR light plan. Two, they make investing in international listings extremely cheap and easy. Three, they provide up to 3.83% interest on cash held in my account. So I no longer have to send money to and from accounts to get a high yield on my extra cash. And four, they have a fantastic

portfolio performance analytics, way better than most of the other platforms. When placing your money with a broker, go with a broker you can trust, head on over to ibkr.com. Restrictions apply. Interactive Brokers is a member of SIPC. All right, Braden, I want to start with you. You have been running, I guess, Fiscal.ai now for, well, Fiscal.ai for like two weeks, but the bones of Fiscal.ai for what, four years now? Yeah, we kind of started taking it seriously in 2022. Technically, the company was incorporated in 2021, but I was still working my job in that year. So it's a loose founding date. I like to say 2022.

And the, I guess, AI integrations and all of the stuff that Fiscal AI is powering with AI kind of started, I think, basically around, what, 2023? Yeah, that's right. April 2023. Okay. So give us your purview, the world of AI, some of the disruptive technologies. What are you seeing? Is there anything that has kind of blown you away? Any trends, mega trends that you are witnessing from AI generally? Yeah, I'll tell you as a consumer, and then I'll tell you what I think about as an investor too, and maybe helpful for the investors, is my unofficial timeline is that wow moment in 2023, but then you're kind of like, eh, this is not really in my workflow. It's like, this is pretty cool for one-off things, impressive tech, not in my workflow. And then you had this next phase of chat with everything, chat with anything type of 2024 vibe, which was, again, not super in everyone's workflow all the time, but very cool for information workers, for example. And then the agentic world came along with like a 6 out of 10 usefulness rating with the potential to be a 10 out of 10, right? It's basically like, what if everything has a lot of intelligence and instead of one agent working on something for me, I have thousands of junior level employees in the sky in a data center that work 24-7 unemotionally and unapologetically.

And so that promise became really interesting. And now 2025 here in recording late June, it feels like 1995. And the reason I draw that comparison is 95, it was the year I was born, but that was when computing in the home and touching everyone on a daily basis started to really, really take off. It wasn't this like archaic nerdy thing. You had like Windows 95 came out and it was like, oh my God, this is now in everyone's home, in every single knowledge workers workflow constantly. That's what's happening right now with AI, where everyone is using it now. like everyone is officially using it and it feels a little bit like if you're not using it it's like you know in a few years it's like what are you doing slash like you're just showing up to work without the tools you need like showing up to your work without your laptop so i think here feels a little bit more like now we need to have discussions around what what disruption is gonna to happen and the ai crosshairs are going after a couple like companies like adobe's and easy target

i think those companies are trading at cheap multiples and they're gonna start trading at cheaper multiples so i want people to be a little bit little bit careful with these names that's like kind of my my suggestion honestly yeah i can attest to using way more ai in my daily life i was a bit skeptic for the general chat bots back in 2023. I mean, they weren't as good yet, but I've ended up being a subscriber to Gemini and hey, like everyone has their different use cases and I've used it on a regular basis now and find tons of value. And of course, using fiscal AI in my daily workflow for investing. I mean, I like, for example, like the new product you guys came out with the AI generated research report. Is it going to do all my research for me? No,

but it was a great start on a new stock and I found it as a great, I don't know. It's very, very helpful. But the question I have, there's so many different takes out there, so many different paths that all these smart people are imagining. And it seems like there's a lot of disagreement where the whole space is going. What is one of these big ideas that people are claiming that you think has tons of potential? And then what is one where you think there's, you know, you have great insight into the insides of an AI company. Where's one where you think there's going to be bottlenecks here and it might not actually have viability? If there is extreme repeatability in a process, requires a mass amount of human capital for the

job to be done, these types of companies are going to probably fundamentally change the most. Both in knowledge workers and in the real physical world, anything that's really repetitive and can be automated will go first. High skilled, high nuance, high edge cases, those are the things most insulated. But most of our world is not super nuanced and edge cases in these type of repeatable processes that people do a lot especially with knowledge work especially with automation in a manufacturing plant or uh in a logistic center i mean wasn't uh jassy talking in their agm like three days ago that basically their entire warehouse is going to be entirely ai in like five years something like that yeah they want to yeah their their number

of workers is going to come down and they're going to have a ton of robotics i think they've talked about their new uh warehouse that they've been monitoring or prototyping in i think it's louisiana that has way less workers is way safer it has a bunch of new robotic stuff and then i guess the big picture one is if you can get them to have some smarter ai you know uploaded to these robots that can make them even more helpful but that might be a little bit too big big of a great take for me i don't know no i think you're right i mean like what if everything has pretty general intelligence that's an amazing breakthrough and and brett i feel like i'm i'm like you where i'm because i listen to your guys but i'm like you that has a natural skepticism in me i've seen it

in you i have it henderson you have it as well i think that every value investor does it's like how we're how we're wired and this year i kind of took the turn on this where i'm like okay i'm not just building a business where i think it's going to change i'm like oh i get it like all these people who go on these panels and talk about how ai is going to change everything it bore me to sleep like it's so lame it's like oh okay i get it now like everything is going to change like i You know what I mean? As soon as you're really starting to adopt it, you see the Luddites of the world like using it constantly in their day to day. It's like, okay, actually, this is probably going to change the physical and the knowledge worker world pretty quickly here. I think that the big change here is that you have these products go from like zero to 100 million in revenue so fast. And the reason for that is there's no training. They don't even have any documentation on how to use it. you already know how to use it like think of like the next auto desk or something yeah i think things you take so long to learn but now you don't even have to learn it it's crazy

yeah it's i would say for i've probably been one of the slowest adopters i know to using ai on a daily basis and for the longest time i thought like every people probably do the same thing they hear ai and they just think of llms like they just think of like talking to chat gpt and they're like well it's not really that useful like maybe i'll swap out some of my google searches for it but it's all like you said the manual processes like if you are a lawyer or a paralegal or something and you're reading documents and all you need to do is extract three things from that document get the person's name details info where a hospital they went to whatever having an ai do that and just speeding up that workflow for you it uh

there's a million use cases like that where it's going to save people time and ultimately money as well um yeah and screw that work honestly screw that work it's going to be disruptive to people's lives and jobs which i am sensitive to but but screw that work man paperwork isn't work i i i But I strongly believe that like it's not fulfilling. Yeah. Let the robots do that crap. That's that's not like that's I don't think we were put on this earth to do that, that kind of stuff. So so let the robots do it. But it's going to change. Bringing it back to investing, I think the reason at the start people such as ourselves were maybe hesitant to go not all in on saying, oh, I'm just going to be an AI guy, blah, blah, blah, all AI portfolio. but more of just skepticism on whether the product is going to work is the few years before that we saw these same people or some of the same people hype up the metaverse, hype up crypto.

And I know some people out there are still fans of those two things, but you saw a huge boom and crash and almost an entirely narrative driven thing. But over the last two or three years, we've seen actual progress within AI. And I think you got to admit when that's happening. yeah you're totally right like your guards up automatically exactly yeah what are some of the quote-unquote wide moat businesses you already mentioned adobe which i think for a long time was considered kind of high switching costs wide moat and maybe still is by some what are some of those stereotypical wide moat businesses that you think are at risk of maybe not entire disruption by ai but at the edges losing some demand from ai yeah i think i'm almost now in the

the next stage of like thinking all of those those things seem to be consensus now in terms of what's going to be changed but what about the second order effects of of intelligence in every device how is car insurance gonna work how's that business gonna work in 10 years when smaller but more profitable maybe maybe right like it's really hard to underwrite this stuff right now and and i don't think the market's at those second order businesses quite yet it's really going it's really thinking high level at like the uber waymo dynamic it's thinking about the and tesla robot tax think about those those items it's thinking about um nvidia asml tsmc is probably like the picks and shovels play of like everyone else fight it out but this is the

infrastructure um those things seem to be pretty consensus but yeah like what what's after that in terms of all of the businesses around them i mean i'd be interesting if here if you've you guys have any ideas like what does geico look like in 10 years i don't know yeah maybe boost the telematics part or maybe there's big advances there there's fewer if there's fewer to 95 to 99 percent less crashes that is going to make them more profitable for a while but then i think there's going to be a huge reduction in premiums so that could actually end up being a bad thing for Um, yeah, I don't know. It's almost like for consumers. Yeah. And it could be a benefit for the companies if they are just that much more profitable. You still need to have, you know,

the government mandated car insurance. I think of almost the same thing with health insurance. If Ozempic is, and all the, not just Ozempic, all the weight loss style drugs are actually as huge as people think, well, maybe health insurance is going to get cheaper. Who knows? Maybe the insurance companies will pay for that and then hospital bills and stuff will come down yeah that's kind of what i think there could be tons of second order disruptions and when i'm investing i'm trying to figure out what's honestly not going to get disrupted uh so i tend to be very nervous about software right now especially ones that i don't know that well i guess don't you guys have this kind of eeriness that you didn't have two three years ago about like your confidence in

the future just being a little bit harder to underwrite right now that's personally how i have have felt on just finding new names and having a lot of conviction in anything right now it's actually been a real struggle for me in my own personal portfolio especially in this year it feels a really really difficult to have a lot of conviction and what what things are going to look like yeah and i'm trying to move from digital to physical world a little more i think software i just get same thing i get nervous about software but ryan what about you no yeah i mean it's true it also coincided with a lot of just multiples expanding across the board sort of throughout this year which has kind of made it difficult for other reasons i was kind of going through

some of the same thought process of like not second order effects but who are the picks and shovels provider who are some of like the hidden beneficiaries of like just sheer increase in ai spend and honestly all of them have pretty much caught like a massive bit like you go to the people selling the widgets to data centers or who's that company with amphinol basically that's majority of their business they've right yeah we like that one rich multiple commercial air conditioning companies caught huge multiples it's really hard honestly to find anyone that's just like a cheap picks and shovels provider to the industry um my my one of our early investors just like 20 minutes ago he's out he's texting me about quanta services the 55 billion dollar

uh electrical engineering firm basically they're like just this big huge firm and that thing went from like 12 times ebit to 40 in the last three years in the back but the backlog tripled so like yeah the entire infrastructure on the electricity grid is going to change so even you're right even that stuff has caught a crazy bid and it's it's not too surprising because you see like the fundamentals are changing for those businesses and oh yeah yeah the business has gotten much better it has yeah all right we have um we have other topics we want to get to but we have a fantastic question from the audience that i think you brain and ryan too working at fiscal ai have a great overview and insight into what you know

might be an answer here tyler asked what do you guys think are going to be the biggest changes to the equity research roles given AI has no use cases? You want to go first, Brady? I don't know. Whoever wants to go. I can take that. I mean, right now we're building a lot of things that allow an analyst to do,

it goes back to the like save the paperwork for the robots a little bit. data aggregation should not should be done properly now that there's reasoning on the ai where it's not just going to extract the data and dump it to you it's actually going to give you it in the right structure uh for each type of industry standardized as well as like the as reported stuff done correctly and accurately so aggregation that you can actually trust Because traditional ML techniques before couldn't really solve that problem. That's why a company like FactSet has 9,000 employees that manually collect data.

We're going to eat their lunch with what we're doing, for example. So aggregation, client communications are obviously changing. I mean, every analyst is already using that. Ramping up on new names qualitatively is amazing. Having a really smart sparring partner with AI right out of the gate, having an associate level right beside you. But what that's going to allow you to do is have more value at the firm, likely less roles, likely more demand for you to own more of the stack and own more names potentially too as an analyst. But the people who are jumping ahead of that and really actually kind of embracing it, I could see this being really beneficial to their career. But if they wait around, it's not going to be.

yeah the i think a lot of the manual work or a lot of the like if you had people that were quote-unquote equity analysts that were really just kind of creating slide decks for people and that kind of work is probably going to get automated almost to completion like maybe you need to do some editing on the slide you know if you're preparing some sort of deck for client whatever i think you can do the majority of that automated as for the actual individual equity individual equity analysts i'm not sure a ton changes other than like solving some of your workflow getting up to speed on a company faster and i saw this take i don't know two years ago and i kind of think about it a lot which is as the world leans more and more on ai especially

the analyst world. And there's increasing algorithmic trading where things are just reacting quickly to numbers. People are maybe shortcutting some of their research by using AI potentially. The independent thinkers, the people that really sit down and listen to the calls, read the transcripts, and think for themselves in a world where everyone's sharing ideas and there's everyone's using ai i think they can find more meaningful differentiated views there there'll maybe be larger mispricings or larger swings uh in individual stock prices because of i don't know ai kind of maybe helping group think a bit yeah and that's that also adds to on top of that the passive investors i think that's another when if there's so many people

that outsource their thinking to either passive or in what Ryan's example, anything AI related that will enable, you know, the fundamental focus investors to utilize these new AI tools to become to have actually better insights. And yeah, I think I've seen it too. Just stocks trading wildly on random news stuff. And I always think, are people really this manic? And maybe they are. But I also think it's because a lot of people aren't thinking and it's a lot of it might be. automated probably is there is probably a lot of just like pure not people actually trading those securities i'm thinking of you know and we can this can move to one of our topics but i'm thinking of the hymns and hers news that led to a 30 drop in like seconds do you want to go through some of

that yeah should we uh move on talk about this one first sure yeah all right so hymns and hers versus Novo Nordisk. I got the notes for this one. Here's a quote from one of the financial newspapers. Novo Nordisk abruptly ended its partnership with HIMS and HERS after the Danish drug maker accused the telehealth company of illegally selling cheaper copycats of Novo Nordisk weight loss drug and engaging in deceptive marketing. So Novo says that HIMS has the deceptive marketing out there and it's putting patients at risk by not having this patented GLP-1 product. or, sorry, having a non-patented GLP-1 product on their platform selling right next to, you know, their flagship product, Wagobe.

And HIMS is saying, it's trying to argue that it didn't like that. I thought it was funny that they just didn't like it. It's like, well, I think it's the lock, guys. But they didn't like that Nova wanted to steer patients to Wagobe regardless of whether it was truly the best option for them. HIMS stock, as Ryan mentioned, collapsed on the news. I don't have the exact figures, but I think 30, 40 percent. And even though so a little context here, because there were shortages of these GLP-1

drugs, I think about a year ago, HIMS and HERS and other telehealth providers were able to get cheaper products because of the shortage due to some law out there. You know, if there's a shortage of a product and people need it in the pharmaceutical industry, they let other people manufacture it to catch up to demand. But now that even though these shortages are over, HIMS continues to make these knockoff versions of We'll Go V and selling it at a discount. I guess I have a tweet here where it kind of shows how angry Novo Nordisk is. This is from an anonymous account on Twitter, but essentially they have this press release and I'm not going to read the whole thing, but it says HIMS and hers has failed to adhere to the law, which prohibits mass sales of compounded drugs under the false guise of quote personalization

and are disseminating deceptive marketing that puts patients at risk and when companies engage in illegal sham compounding that jeopardizes the health of americans we will continue to take action okay that's a lot of info what are you guys general thoughts here can i ask can i ask a basic question about this company because i don't sure i don't follow it too much other than know i know it's been a hot one and cult like followed a little bit are they making their own products or are they just a distribution business they work with manufacturers for generic drugs so balding stuff um viagra type stuff you know stuff that's generic but then they also work with someone like Novo Nordisk to get these drugs. They're not necessarily making anything novel.

You might see them talk about their new quote unquote product, but it's not a new drug. So they just released for the HERS side, I think it was this chewable gummy that had one of the balding medications plus biotin in it, which is really just combining two things together and putting it in a nice marketing package. So their edge has been, we're really good at marketing. We're really good at getting people onto their subscription services. We have nice branding, but we are just selling generics over the counter. And I guess another reason that they have been successful is that they use fairly cheap, generally stuff that's fairly cheap and avoid the insurance. So if you're going to, you know, if something's 30 bucks a month,

it might not be worth it to go through insurance so that's been another uh loophole yeah so that's i think hopefully that answers it tyler says uh plus or minus 30 percent is like a typical day for the hymns shareholder which yeah certainly has been lately the thing for me about this is and this kind of gets to i guess some of the i feel like there's just been a ton of frothiness overall in the markets over the last specifically like the last month or two and it's not even that quality stocks are trading at expensive multiples although i think a lot of them are it's some of the like most fragile business models that are getting extreme multiples like or no business models yeah my nuclear my nuclear stocks are some

pre pre-revenue businesses uh which not all pre-revenue businesses won't have revenue in the future but like there's inherent risk there obviously and in this case like if one if a press release from one customer can take your stock down 30 in seconds like i think you gotta ask some serious questions about the the validity of the business model well it's it seems to me that hims and hers just is thinking that patents don't matter and they can just ignore it because these drugs just came out they're still on their patents no notice i got the numbers from finch at or sorry physical ai i should get a drink there i have to drink uh novo nordic spends six and a half billion dollars on rnd annually hims is at less than 100 million

If you want Novo Nordisk to spend $6 billion a year on drug development that could turn into these weight loss drugs, don't you need to allow them to have a profit? I don't know. I was talking with someone that's been on the show before, Paul Serra, who follows this name closely. And I kind of just asked the question, like, well, doesn't the patent matter? And he said, that's what every investor is saying. So it seems to be they're in a tough spot and kind of pretending there's no issue when they have this, what I think Novo Nordisk has a market cap in the hundreds of billions. This company is going to come after them and it could be, I wouldn't say fatal, that might be too aggressive, but it could be terrible for this business. yeah and it's like one of those things where that huge r&d spend or huge capex spend of

businesses is both the bull and the bear case like nine times out of ten for these types of businesses and either way you're up against a massive gorilla and in these types of disputes the most stubborn party always wins and you're allowed to be more stubborn if you have more capital so uh it's it's a it's a tricky situation i hate owning companies with supplier risk yeah concentration and like one or two suppliers hate that um so you know i don't know the business too well so i'm not going to comment more than that but generically that's my approach yeah the go ahead bro i i said we did a research report episode on them last year and I said I liked the stock but wasn't buying

and now it's up about four times since then. I still would say the same thing today is there's risk from one, management being very aggressive in an industry where lawsuits could get them in trouble. I've seen people say that they're selling essentially with fake doctor consultations, drugs that can have side effects,

some of these generic drugs like the balding medication. that could lead to a class action lawsuit if they don't get their everything in order and another thing is that they technically don't have any ip they are saying the same selling the same product that row all those other ones that get marketed to people our age yeah i don't know the bear case but the bear case is that it's the business is manscaped It's the same product that everyone else has with louder, fancier marketing. It's a great analogy. These types of businesses, you got to give it to them.

There is an actual skill to distribution, 100%. Distribution, execution, there is a complete skill to it. Not everyone can do it. So I hate knocking on that. It's like, oh, it's just distribution. There is skill to that. it's just not my style of investing. That's really tricky to own it long-term.

I agree. All right. I've got a couple topics that I want to jump to. People want to know what would cause you to sell Constellation Software, but before we do, I want to talk about Blue Chippers Club, one of our sponsors here. This was started by two friends of ours with the goal of building a tight-knit community of stock-focused investors.

We've already seen a ton of people join, And in this club, you can share, break down your portfolio, pitch stocks, receive feedback. Brett, I saw you recently through your real brokerage write-up into Blue Chippers Club. There's also weekly calls that you can participate in. It's honestly just a great tight-knit community for investors if that's what you're looking for. Head on over to bluechippersclub.com to hit apply. Once again, bluechippersclub.com. The link will be in the description.

Brett, I interrupted you there. I saw your write-up on Blue Chippers Club. Any thoughts? Yeah. What do you mean? Which company was it? Any thoughts is Real Brokerage. It's a cloud-based brokerage.

I don't know if it's a business model that's too widely known, but essentially it's just software and a brokerage that allows real estate agents to kind of become their own brand or teams of agents to utilize them without going to some of the big legacy players in their area. And they're growing quite quickly. Yeah, it's, I don't know.

And you're a shareholder. Yeah, I'm a shareholder now. I ended up buying. And I'm one of those where, you know, it's not a huge position today, given it is a, I think a micro cap, maybe just a small cap, fairly risky company. But I think there's a lot of long-term growth potential

if they can hit on some of their key growth strategies. Okay, where do we want to go next? I've got a small cap of the week that I do want to talk about at some point, but Braden, let's talk Constellation Software. As of your latest portfolio, your Fiscal.ai, formerly FinChat, portfolio update, you posted your portfolio on Twitter.

I think it was about 38%. Looks the same as every update, doesn't it? well it was i think around 38 percent of your equity portfolio so someone that doesn't include um the two spin-off companies which are another like eight percent oh really yeah what were the two topic is and lumine yeah okay what would or is it possible for anything to happen to cause you to sell your shares in constellation software oh 100 i mean i i love i love the company i i love the management team but i'm not married to these things uh i'm i i'm an investor to make money that's i'm unapologetically uh you know position myself like that now

i hope to never sell a share uh that's that's my my vision and my goal but the if there were to be a material unfolding of my thesis, then yeah, I would happily move on from the name. I haven't seen anything that has caused me to do that. And I typically, if there's some unfolding in my thesis, it's not like I wake up and sell the whole position. I just don't operate like that. I like to see a few quarters of like,

oh, I'm wrong before I snap decision that I'm wrong. like they are a acquire acquisition machine at scale and they have a massive massive backlog of companies that they can continue to acquire there is more competition in what they're doing they have talked a lot about these types of copycats they're all over the world that doesn't mean they can execute at that same level and have their tentacles as they do across all these different potential acquisitions. I mean, look, they are very, very good at what they do. And if something was to happen to the company

or if Mark Leonard was to move on and that special sauce falls apart, then there's lots of other good companies I can own in my portfolio. It doesn't have to be Constellation. The reason that it is such a big part of the portfolio is i have not added to it at all and it continues to maintain about a 40 position while i add fresh capital to everything else i mean so so the real story is this is the real story of consolation

software okay i owned a very small position in the hundreds okay uh share price it's about a five thousand dollar stock today that's phenomenal returns phenomenal returns uh yeah it's just it's just a beast of a execution um about slightly maybe a little higher than that position i'd have to check on what the exact price was but the the this is this is what actually happened okay so i worked for the government and i cashed out my pension because it was either like here you can get 40 bucks a year when you retire and when in 40 years or you can cash out about 70 grand today i cashed it out moved it to my brokerage account and in one trade bond constellation software one trade the whole it was basically all of the money that i owned um what year is that do you

And I never looked back. That would have been 2020. Wow. I owned the position well before that. I've probably owned the stock for probably 10 years now. But that would have been like it moving from like a 3% position to like, you know, at the time, like I was 24, 25, like 70 grand was probably, you know, maybe half of my net worth at the time. So yeah, it was, it was considerable for me at the time was the, and it's done so with minimal volatility. The drawdowns are pretty, pretty small in that company. let me double check this on fiscal ai but i if i'm not mistaken they have never had

or maybe in like 10 years they have not had a 25 drawdown that's correct yeah yeah well in since 2006 they have never had a more than a 22 drawdown that's right that is insane stable shareholder base it's a very very patient shareholder base the shares don't turn over people kind of just hold it as long as they can right like it is definitely one of those stocks it only trades on the tsx it's not caught the eyes of people kind of in and out of it the shares are five thousand dollars each most people in canada can't fractional share it so you don't get the retail base it's a lethargic lethargic shareholder base uh types of people i like hanging out with i mean that was kind of early days berkshire obviously there was no fractional share selling

and the i always get them mixed up the a shares were trading at whatever a steep cost and people would they weren't going to split because they were like we want this to be a commitment we want you to actually like not just mindlessly buy a share but like you have to commit some real money to to become a shareholder and it i would say i'm guessing most people can't buy the fractional shares today for constellation so it's probably quite similar you would you attract the shareholders you deserve on a long horizon yeah and mark leonard's done a good job of that by by more often than not saying nothing but just being mysterious look i mean there are too few p there are two people that i think have understand human incentives best in the entire world

charlie munger mark leonard i i don't those two guys understand human incentives better than anyone else and they use that to make billions of dollars like i i truly mean that like that that is the entire business model it's understanding incentives i just wish leonard could you know teach his wisdom more publicly like monger but maybe when he gets older he'll do that let's talk your small cat ryan abercrombie and fitch yeah this might be a is this a thing in canada is that is that a common brand in canada yeah i think it's the same as far as i know the same story as in the US. It was really popular when we were in high school. It died and now it's back. Is that the right story? Yeah. Same thing.

It's about right. So people have probably heard this name. I'll say, I thought they were bankrupt for the longest time. I just assumed they were bankrupt because there was a mall-based concept. It was traditional retail. Investors hated it. And apparently they've had a whole bunch of near bankrupt uh or gotten near collapse anyways today 3.8 billion dollar market cap the stock is up roughly 5x over the last five years they uh got a new ceo and basically started this turnaround strategy in 2017 let me make sure i get the name correct i don't know if i have the name here but uh a woman ceo she took over in 2017 and she basically got decided so they own hollister and they own abercrombie and fitch which if you grew up as like a teenager from 2010 to

2020 those felt very similar it was just like the cool kid fashionable mall store and they had basically merged into sort of the same brand so she came in and said look we need to we need to turn either we need to mesh them into the same store literally or we need to change the branding around them and so abercrombie basically became sort of the store for busy millennials and it it sounds really easy to just like oh we're the store for busy millennials and like give it lip service but they did a lot of like small tweaks to really change the store format like they really optimized for online buying so that people could kind of come in and get their stuff really quickly they changed the inventory or the merchandise to kind of cater more to that audience

there i don't know if you guys remember this but they used to have like just really dim lighting for some reason in those stores they changed that and just cologne everywhere yeah you can't even three that's uh yeah i remember so they they've revamped the model there hollister sort of has that same vibe still um of kind of catering towards the the teens that want to hang out and shop but abercrombie has really renovated and it's apparently that along with some other operational changes they cut a bunch of underperforming stores and apparently it wasn't like the stores were in terrible locations but they were just three times bigger than they needed to be so like look we can't we can't shrink it down we got to get rid of it um or in some cases

maybe they were able to get a new location in or a new place in the same location but basically it's changed the profitability on a per store basis in a huge way so rent costs have come down I created a custom metric with fiscal.ai. Shout out to them. They've got store count and then they've got, I just used operating income divided by the total store count. And it's basically gone from, if we go normal year, February, 2020, they were generating about $160,000 in operating income per store. Today, they're just under a million dollars in operating income per store. They have now had nine consecutive quarters of positive comp store sales they traded an ev to ebit of six times yeah brett's sharing the screen here and it's i i have like a no apparel policy i

think brett and i have developed like stay away from apparel at all costs but they have bought back 12 of their or they're on pace to buy back 12 of their shares this year any interest in this concept a bit of six seems like a fair price for an apparel company it's just tough out there i was thinking this whole time well i don't even know that maybe they're targeting a different audience maybe i don't know if it's like if it's gender different or gender neutral um but i just think you know if you want cheap stuff go on amazon and then there are all these other brands that'll just give you 80 off throw you coupons that you can buy stuff online if you want apparel and it just seems like a highly competitive industry that is getting even

more competitive every year because of the internet and then you have the forcing function of amazon yeah six times earning seems fair but but hey that was before they started ramping revenue per store and operating income per store it's been the same issue for a decade i think something is working here go ahead henderson henderson none of this matters okay none of this matters is the cool is the company cool right now yes i think it is like 10 years it might not be exactly and that's why fashion is impossible but but operating income per store who cares like is the brand cool right now we're talking about a you know apparel company abercrump it's cool right now they're helping people go from like

my wardrobe sucks to it's fashionable again i've been using that to like un ugly myself uh port like in my in uh in my closet and my fiance is very into fashion and she's been getting me stuff from there and it's good it's it's a bit fast fashiony for sure but the price is like mid-tier uh they probably make some decent margins on stuff and and you go in there and it's like you can get some stuff that will like make you look like you're part of the newest thing right and they jumped on this newest thing which is like back to 90s fashion before everyone else and that's why they're crushing it yeah but this thing will go out of fashion soon and if they don't get it before the next thing it's the it's the same fate of

every apparel company but the four returns on this stuff had i said none of that matters with this like it is literally just is it cool and how long can it be cool yeah yeah i got zero zero insight for you yeah exactly brett our uh resident fashion expert yeah i'm not i'm not that much worse than you right come on that's true the yeah honestly as much as i i will say good for them totally did not see this turnaround coming yeah and really well done kudos to that ceo for actually making themselves cool again but yeah i just genuinely i have no interest like it could be it could be like three times earnings what's the market cap 3.8 billion yeah this yep 3.8 ev4.2 but that could include operating leases anyway all right

well there's our small cap of the week if you like investing in apparel i'm sorry for you but also this could be an interesting concept to look at yeah i saw that lululemon is almost going to hit the same speaking of apparel and companies that go out of style which that's a huge debate among the investing community right now it almost does the same multiple as british american tobacco they're converging since you know i don't know which one one's a growth industry i'll let you decide which one exactly exactly um all right you guys want to do a bubble watch yes but before we do i should mention for small cap of the week and for all your stocks fiscal.ai has all the data you need and more and you can use our code or our link fiscal.ai slash chitchat to get 15 off any

paid plans bubble watch there was a lot to choose from this week brett yeah i'm gonna choose one that was floating around online i'm just gonna read this article from bloomberg and see what you guys think quote a footwear startup is teaming up with two space companies to design a shoe in orbit as part of a mission to make artificial intelligence and blockchain less expensive and more eco-friendly than it is on earth orbits edge a company that supports ai and blockchain applications and copernic space which offers digital marketplaces for space assets plan to send a solar and battery powered satellite to space equipped with a computer that will use ai automation to produce a shoe design for the scintillate brand the mission is expected to

launch on a spacex falcon 9 rocket in early 2026 i don't know what any of that means to be honest i did not follow that it just smash all the buzzwords you can into one press release profit yeah it's a publicity falcon 9 those are cheap those are cheap missions i hear yeah that's a nice i i sure hope the uh pr stunt is worth it because that's that's not cheap if you're taking a falcon nine rocket to do it yeah well i was really interested to see if these companies were public but i don't think they are um yeah i don't know i got no thoughts either just kind of whenever there's a new technology or something like ai and it turns into a narrative there's going to be all these copycats i think remember long island blockchain long island ist

changed themselves to blockchain when that was the new narrative that wait what was there's going to be all these companies that are trying to they don't have anything and they're gonna try to just take advantage of this narrative to raise money i'm sorry what did you say about long island ice tea yeah do you remember this was 2017 i could be misremembering it but long island ice tea changed their name to long island blockchain yeah yeah all right all right what other uh bubble watch do you have here we have well i don't know if this is a bubble watch but i thought this was a crazy story and it's not really that investing related but it's it's a big investment fund uh the co-founder of jane street capital admitted to accidentally funding a coup to

overthrow the south sudan's government uh robert granieri the co-founder of new york-based hedge fund said he was deceived into funding seven million dollars for the purchase of ak-47 stinger missiles and grenades uh i don't want to mention the people he gave the money to but both to people that were accused of scheming a south sudan coup in march 2024 so if you think about you're making a mistake with your job just you know you didn't make the worst mistake this week how do you accidentally do that they tricked him into thinking it was a non-profit apparently wow yeah maybe it was maybe it was technically a non-profit yeah that's a hard one to come back from crazy headline i see people get scammed with like a crappy course for

70 bucks and then i see this i'm like ah take that as a cheap lesson yeah you could be doing much worse um than this guy yeah with a guilty conscience i got no other thoughts on that too but here's one that i think is an actual topic that maybe you guys have some thoughts on it's probably one of the biggest news items from the week, and that's the Tesla RoboTaxi launch. They deployed a small amount of self-driving cars in a portion of downtown Austin. Everyone pray for Ryan's safety, as he is within the vicinity of these vehicles. I looked at the map on Google Maps that they gave for their geofenced area, and it looks like it's about, you can drive about across in about 20 minutes. So it's not a huge portion of Austin's downtown. The company claims

this is the start of bringing the product national, although most industry experts are highly skeptical and we're already seeing a lot of edge cases i guess there's a video of we're going to play the video but they they paid an influencer to take a ride in the vehicle and she was trying to promote it and some sunlight hit the cameras and then it started jerking around and going a little crazy like slammed on a lot of these yeah yeah i saw one i saw there was i mean a lot of the i think it was like basically youtubers or maybe tesla shareholders that were like really the people riding around on this because i think it was like a tuesday during the day when they launched this which i imagine most people were working

and it just veered into oncoming traffic and they were like oh okay well that was one error small error it's like that's that's a pretty big error and austin's relatively easy to drive in yeah that's why i think that was way most first testing ground now brayden ryan and i have talked about these type the self-driving stuff ad nauseum way most stuff like that listeners know a big topic it's worth this yeah it's worth it yeah so listen to know our take but i'm curious do you care about it as an investor do you look at do you have any hot takes on the industry what are your thoughts yeah i care about it a lot i mean i i've been um i've been an uber shareholder for uh give or take two years now i want to say um a company that i never thought i'd be an investor

and when they ipo'd but you know things things change facts change change your mind and um you know looking forward to what's going to happen and the impressive execution of of waymo and this kind of forever incoming robo taxi launch which i guess last weekend they did it in this kind of small test case there's all there's going to be a lot of critics for this technology when things go wrong and there's going to be the video and there's going to be the lobbies against this and it's going to be a very contentious topic and there's going to be a lot of people who are kind of not the not in my backyard types who will never want to adopt this and never trust it themselves and and i get all of that but i live in toronto one of the most congested places on

planet earth when it comes to traffic um there are some horrendous drivers and i see these videos of like a waymo take a wrong turn or like you know accidentally cut someone off like oh it's just that's like a nine out of 10 compared to what i see on an average day so i am very pro this stuff especially if it can uh get people places faster and cheaper and more safe because the stats are the stats is it is it is more safe and human drivers just suck they're always on their phone uh people are just constantly distracted um i live down in florida this winter and where i live people are scrolling on their phone and doing stupid stuff but for the most part it's very frowned upon dude i swear people are like watching netflix in florida while they drive like it is

just people are just yeah people are just hands out driving out the front windshield like just shameless and no room down there no yeah and it's scary it's honestly scary i just think to myself like this is so obvious that that it should be done with with smart technology instead and and it's coming it's and i i'm especially excited for it to come to commercial long transport logistics as well too um because that that's going to come as well too not just like the kind of uber taxi taxi types it's a long game with amazon and their ambitions there a hundred percent so you're an uber shareholder unless i maybe that was in the past i don't know if you or today still am today. Yeah. What are your thoughts? You know, it's another one that's

turning into a battleground stock partnering with Waymo, but people see the risk. Have you been looking at it? I've had to think about the, the use case and distribution of how things will change over time. I really, I really, next time I'm in California, I want to just go to the Bay area and order one. I've never been in one and just understand the process start to finish. And then I really want to understand these cases where they're using Uber for the distribution. Like, is that the case in Austin right now, Henderson, or is it? Yeah, it's exclusive on Uber. It's exclusive on Uber.

I haven't been able to figure out exactly what's in the mind of the Waymo CEO of what they think distribution looks like in five years from now. I would love to be able to tap into that. and that's why it's a battleground stock because no one really knows it's like they have this area over here where it's completely autonomous all the distributions done on their own app they're rolling out in phoenix and austin exclusively on uh and other locations it looks like some of the comments here in atlanta through uber i think i think they're gonna be doing miami on uber as well too and that makes sense you get instant distribution and that's like that's the uber remote speaking. And then you go to where it started in California, it just completely

bypasses the rails. So it feels a little bit like a Visa MasterCard situation where there's a new payments network being done. And in some areas, they're having to use Visa and MasterCard. And in some cases like Asia, where they're completely bypassing the rails. That's the parallel I'm thinking of. I still own the stock and I'm still bullish on the stock because so many places there will need to be the rails. But again, the same way I got into the position, I may change my mind over the next few years. I haven't been adding to it,

even though the numbers keep getting better. I haven't been adding to that because like the beginning of this episode, underwriting that with technology, I just don't want to get smacked on the wrong side of a secular trend against me. That is the easiest way to lose money, to be on the wrong side of secular trend.

I don't care if it's cheap. I don't care if the fundamentals look great on a historical basis. It doesn't matter. If something's trading at 20 times earnings and you're on the wrong side of the secular trend, you're going to own it at 12 times earnings and lose a lot of money and still think it's cheap. The market doesn't care if you think it's cheap. I only care about making and losing money in the stock market. Fair point.

Fair point. Ryan, do you want to talk? We've only got a minute left here. Your portfolio update with AST Space Mobile? We can save it for another time. I do want to ask a pseudo-announcement because we got Braden on the show today. First of all, kudos to our Series A. Anyone that doesn't know, you can check it out online. Fiscal.ai raised $10 million. Can you give some of our listeners context around the name change? Why did you decide it was time to go from FinChat to Fiscal.ai? there's three reasons why we needed to change the name uh fundamentally rather than like oh we really like fiscal that we're going to change that so there's three reasons why we need to change the name one is people thought we were strictly a chat with financial data application

rather than a full-fledged terminal and as we talked with more enterprisey institutional type users they were coming to us with that and then going like oh my god like this is this is better than my current terminal setup. And we have two Bloombergs for our 15-person office that we're all sharing. Everyone else should have a subscription to this. And we're not going to replace our terminals, but this could be complimentary.

So that was happening a lot. The second reason was IP issues with the chat name. We don't need to bore ourselves with that. And the third reason is with banks, it was getting blocked because anything chat AI in the URL, most large banks were just banning it as like an uh a site you can go to because they don't want to have people put their data into these llms like customer sensitive customer info so we'd start like a trial like our demo with the bank and i'd be like yeah just go on there and like start your

account and they're like oh like it's blocked that's why we reached out to you to get a demo and then i'd get like a eight months later i'd get a notification that it was unblocked It's like, okay, I completely forgot about our conversation. So it was really messing up our sales cycle. So we need to change the name. Fiscal.ai came up because one, we thought it was a fantastic domain name that was available. The name wasn't being used. Six letter English word.

Fantastic. That means finance. And I did some research. It is one of, if not the most used English word on our entire platform for a name that, for a word that I thought was very related to like government policy at first. I was like, oh, wow. Every public company reports their fiscal Q1 results or welcome to our Q1 fiscal earnings call, this and that, and they're reporting their results. And that's, at the end of the day, what we're doing is we're aggregating and displaying financial data off these companies

who report them. So we thought it was a fitting name. Oh, yeah. Well, I'm biased, but I like the name change. Uh, it always feels a little weird at first, but, uh, hopefully it'll sit well over time. Any other closing thoughts for you, Brett? Don't think so. Yeah. Link to fiscal AI is in the show notes. Get into yourself a nice discount. Plenty of listeners have signed up. So we appreciate that. I'm sure brain and Ryan do as well. Um, let's hit the disclosure and we'll get out of here. Uh, we are not financial advisors. Anything we say on the 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

into this episode joining the live stream that goes on every thursday on the chitchat stocks podcast youtube channel but listen to the recordings on youtube spotify apple podcast wherever you get your podcasts and we'll see you next time We'll see you next time.