Chit Chat Stocks - Why eDreams Is Winning in European Travel (Ticker: EDR) with Chadd Garcia

Episode Date: November 10, 2022

eDreams operates as an online travel company in Europe. The company offers deals for flights, hotels, and other travel needs. eDreams was founded in 1999 in Silicon Valley. Listen as Brett and Ryan ask Chadd questions about the company, its business model, and valuation. Enjoy the show! ***************************** Interested in becoming a member of 7investing? Subscribe with code “MONEY” and get $100 off your annual subscription for life: https://7investing.com/checkout/ ***************************** Want updates on future shows and projects? Follow us on Twitter: https://twitter.com/chitchatmoney Subscribe to our Substack to receive free show notes and charts that go along with every episode: https://chitchatmoney.substack.com/ Interested to see more of Chadd's work? Check out the Ave Maria Fund here: https://www.avemariafunds.com/ Contact us: [e-mail] Timestamps eDreams | (5:12) Unit Economics | (18:59) Valuation | (26:25) Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. This is our Thursday deep dive episode where we interview an individual analyst on a single stock. And today we're talking with Chad Garcia on eDreams. This is the first time having Chad on the show. And I got to say, it was a pleasure. You're going to see it or you're going to hear it throughout the interview. He's a very good investor. He's very thorough. And eDreams is a fascinating company. Did you have any highlights from the interview? Yeah, the highlight. first off eDreams is a travel uh well an online travel agency from Europe anyone with a you know your brain might have been going in a weird direction there do not that was not what the business is it's a weird name it's a weird name but it is yeah European online travel agency and

we get to why they may be uh separating themselves from the pack uh which is quite interesting I mean the subscription program is the most fascinating part here and how they're trying to improve their margins, stabilize their customer base, and evade the Google tax, which is quite fascinating. And before we get to the interview, we want to talk about our sponsors, Sound the Alarm. Today is the first of the month we're recording this, on the first of the month. New picks are out. I assume you haven't read any of the reports yet because it's bright and early. Without looking at any of the reports, who had your favorite, Rick?

oh i'm going to say the most interesting one from my point of view and again everyone has different ones uh would be simon's just because it is in the semiconductor space and it is company i have looked at before and think has some promise but the technological stuff um was a little bit over my head so i'm hoping uh through simon's research and kind of utilize that and maybe get up to speed on how all the technology behind the products work um he's exceptional explaining the technicalities yeah let me teach some of the other ones we got two software stocks we got a defense stock we got a biotech stock we got a company from africa which i think will be interesting as well for anyone that likes to look at the international exposure so across the board really good stuff and

if you're interested in the service you get seven and seven research reports every month plus more which we'll talk about on different episodes and use our code money at checkout. The link is in the show notes and the code is as well. You get a hundred dollars off your annual with the code money. That's right. Every year for your subscription. So not just a hundred dollars this year, that means a hundred dollars every year you're subscribed for 7investing. All right. Well, without further ado, here's our interview with Chad Garcia. Welcome to Chit Chat Money. On this show, host Ryan Henderson and Brett Schaefer interview industry experts, and riff on the world of investing.

As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or a recommendation. Now, please enjoy this episode. All right, welcome in. today we are joined by Chad Garcia. He is the co-portfolio manager of the Ave Maria Growth Fund

and the lead manager of the Ave Maria Focus Fund. Am I getting the introduction right there, Chad? Okay. Why don't we, I guess, why don't we start there? We're going to be talking about eDreams today, which is a European OTA. We'll get into that in a second, but why don't you talk a little bit about yourself, what you do and what the strategy is with some of the mutual funds? Sure, sure. Well, as you said, I work for Ave Maria Mutual Funds. We have a family of six mutual funds within the Ave Maria complex. We have one mutual fund outside of that complex. We run close to $3 billion. dollars. I work directly on two funds. One of them is the Ave Maria Growth Fund, which is just under a billion in assets, and the newly launched Ave Maria Focus Fund, which we launched in May of 2020. That's just under 50 million of assets under management. And what makes that fund a little bit

different than the standard mutual fund is that it is legally a non-diversified fund. And so I can take much more concentrated positions you know the average mutual fund may have 30 to 60 holdings the focus fund right now has around 17 holdings of which edreams is one of them with a i'm kind of like unfamiliar i guess with the mutual fund space with a diversified one do they have to be like equal weight or can you be is there concentration limits with the typical fund they don't have to be equal weight but there are concentration limits and so for a standard mutual fund you can't buy a position you can't buy a position you know larger than five percent of the fund's holdings it can position can appreciate but but the starting point can't

be above five percent on the on the buy of the gotcha yeah and you get that downside of the diversification potentially and so hopefully you're with your you guys you're hopefully avoiding that that's the plan all right all right well today we're going to talk about eDreams I guess kind of a basic question here what is eDreams because I imagine most of our listeners haven't heard of it they probably have not unless they travel frequently with within Europe but eDreams is an online travel agency or OTA and it's focused on leisure travel primarily in Europe so about 80% of its revenue is within Europe, and 80% of the European travel market is covered by them. They are the leader in providing flight services to travelers. So they're number one in flights

in Europe. But they also offer other services such as hotels and rental cars. All right. And I guess we're going to get into the details of this business, what makes it different than maybe one in the US. And I guess the first question is in the U.S., flights are really not that compelling of a business for OTAs. In Europe, why is this different? Is this just kind of the density of the countries and how frequent people are flying across them? Is it how many people are coming from international areas? What is it? Well, in the U.S., the top four airlines control 75% of the flight routes. If you look at Europe, the top four airlines can only control 29% of the flights. And

And in the European market, most flights are multi-legged and most flights are international in nature and can have differing currencies or other complexities. Additionally, while in the U.S., it's common to have 24-7 customer service phone numbers with airlines and airline apps that work well with respect to booking flights, rescheduling, adding bags or other ancillary services to your flight. In Europe, it's not that common with their airlines. And so, you know, eDreams has an app that basically gives European travelers the functionalities that American travelers have with their airlines. Okay. And is eDreams the only brand under their umbrella or do they have multiple ones that maybe if, say, a listener from Europe, they'd recognize this one that they're actually going through? eDreams and Odigio would be the two primary brands, but they have several brands. Okay. Are there, I guess, is there any historical context that's important for eDreams? In what sense? I mean,

just can you give us some of the history of eDreams and what's led it to where it is today? Well, eDreams was a role of several different island travel agencies. And so in the European markets, you may have an OTA that's strong in Germany, but maybe not so strong in France, another one that's strong in France. eDreams was put together by the merger of several businesses, ultimately became owned by two private equity firms through merging their respective online travel agencies together. and then it was taken public in 2015 and shortly after going public the company struggled as as google changed their their search engine algorithm and that hurt the

company's margins and hurt some of the company's revenue as at the time the company was was fairly dependent upon google and other performance marketing that led to the ousting of the ceo the ceo of the business was was elevated and he worked on getting the company less dependent upon google and other performance marketing makes sense all right and how did you get involved with edreams i guess give a little bit of historical context of when you started you know looking at the company and why i guess this kind of gets to the meat of the question of the investment thesis why is it attractive to you as an investment sure sure well i have um the one of the largest shareholders in edreams is a u.s based hedge fund i have a friend uh who

invest directly in public companies and as well as private companies. One of his clients is an LP in the hedge fund that was a large shareholder of eDreams. And so he got involved with it and invested directly through eDreams, given that relationship. And he was telling me about it for years, I took a deep look at it in 2019 and I saw the turnaround of the business with respect to being less dependent upon performance marketing. And I saw a business that had really failed to recover from the stumbling blocks that they had in 2015 with respect to the search engine optimization issue. And it seemed like, you know, aside from a couple of funds in the U.S., the company was left for dead by the European institutional investors.

And so the company was trading egregiously cheap, and the turnaround was well on its way to being in place and to the point where I thought they were going to start repurchasing shares, which they did shortly after I bought them in the spring of 2019. the company started to repurchase shares right before COVID hit in February of 2020. Yeah, yeah, unfortunately, well, you know, it was the right move to repurchase shares before then, but you know, nobody knew that the, that the world would be shut down. And so you, and you invested at that time?

I, so we invested in, in our, our mid cap fund in eDreams in, in 2019. The Aubrey Maria Focus Fund launched in May of 2020. The, the company has a variable cost model. And so I, my gut told me that they would make it through COVID, But you really saw that work out when they reported their Q1 quarter, which was in June of 2020, because that quarter was fully impacted by COVID. And they had a very de minimis cash burn. And so I was comfortable that they probably had a two-year runway at that point. um if travel didn't improve and at that time travel was down 66 so i was comfortable that

they were going to make it through the covid period and they did they did so without having to raise equity or additional debt which was fairly unique in the in the online travel agency sector i mean maybe booking didn't have to raise equity but i remember For Expedia raised some from Apollo and their European competitors were raising money too. And so I thought that they would exit COVID in a position of financial strength and do well. And when I figured out that they were going to make it through, I started buying it in the summer of 2020 in the new Ave Maria Focus Fund. so at that point we held it in two funds in the complex the mid-cap fund and the focus fund how long i guess did the was covid like really impacting edream's business did that had it

kind of passed after a year or so or has it well is the recovery still going on i know we saw visa with saying that their cross-border travel is up like 49 i guess in the recent quarter so it seems like that recovery in europe is still ongoing and it's been a bit slower in the u.s is that is that how it is there's still kind of progress to make to get out of the covid uh headwind well keep in mind that visa is is tied to total travel and business travel is going to lag leisure travel okay e-dreams is 100 focused on leisure travel and so theoretically that should have bounced back quicker because I particularly, particularly Europeans, Europeans love to travel. I mean, it's going to, things are going to have to get really bad for them to not travel on their

vacations. Right. But COVID had two impacts on the business. You know, the first one was you had economies that were shut down. And so that's going to impact your bookings. That started to change the summer of 2021. So June may have been 2% positive on the number of bookings versus pre-COVID levels. And then it went into the mid-teens in July. And then it went up to 30% growth over pre-COVID levels

in August of 21. And with a brief pullback in December and January of 21 and January of 22, because of the Omicron variant, the bookings for eDreams versus pre-COVID levels has ranged between, call it 30 and 58% higher than pre-COVID levels for each of the months. So Europeans are traveling and they're traveling pretty hard. The last measurement that we had was as of, I think it's August 28th, when the company reported. And so through August 28th, the bookings are quite high. and and that by the way includes the the invasion of ukraine i mean that the invasion of ukraine

dropped dropped the bookings a little bit but it didn't go negative it was still strongly positive all right so i i think one more one more one more thing to mention on that the other the other way that covet affected it was that when people started to travel coming out of covet they took flights that were they took trips that were lower in duration and a closer distance to home in case you know that some regulatory rule changed and you know they didn't want to get stuck halfway around the continent you know they wanted to be closer to home so maybe they could drive back if they had to so that that was one of the other changes but i think that that is normalizing at this point okay makes sense and i guess one big transition that's there they're sort of in

the middle of right now is the prime program um can you explain what the prime program is and what its financial impacts could be on the business yeah well the prime program is really the extension of of the work that dana dunn the ceo has completed on getting on sidelight in google and other performance marketing so the first i was to get into prime i would first start with the app their development of their app so right now 50 to 60 percent of the bookings are made via the app and so if a booking is made via the app that means that that booking is not does not originate with google or some other meta search provider that leaves that leaves 40 to 50 percent of the remaining bookings to be done on a desktop computer which may be done directly or

may be done through performance marketing okay and so the first big step the company did to get away from google was to develop the app to get people accustomed to using it so they book directly with that the prime program is the next evolution and with the prime program it's it's modeled after Amazon Prime or even Costco's program. It's called Prime, funny enough. And in that program, a customer pays eDreams 55 euros a year. And for that, they get discounts on travel bookings. It usually pays back within two bookings. And what I think the company is doing is basically giving away all over the booking margin that they make on a customer on each transaction, give that back in the form of discounts to the customer.

So for the customer, it's a nice low cost value proposition. And the margin that eDreams is going to make going forward is just the value of the prime subscription. It seems like the big thesis here is that the prime subscription changes the unit economics for the business. Can you maybe go in and we probably should have hit this earlier, but can you go into more detail on kind of the major costs that eDreams might have? You know, I know people worry about the Google tax and anything else, but you mentioned this

is a high variable cost business. Just what are, you know, the major costs here and kind of what margins do they have? and maybe what could they have in the future if the Prime program continues to see success? Well, you want to look at net revenue. So their revenue isn't the price of the ticket. Their revenue is the booking fee that they make when they sell a ticket, right?

And that historically was between 40 and 55 euros per booking. And with that, they had to cover their fixed costs. So let's say they're 15%, 20% EBITDA margin business. The prime customer, the prime program should get them to, I estimate, 32% EBITDA margins. and the only thing that they're making in that would be the prime fee the any any margin that they make from the booking they return to the customer in the form of a of a discount okay and okay and that the positives there is that it's just more reliable revenue because subscription

and it's going to be higher margin now i guess the big question is what's the future like for your dreams how many subscribers can they get with this prime program is there anything else that's important besides the prime program and i guess do you have any uh i i know investors and listeners can look them up on the website but any context how many subscribers i think they have like three million unless i'm remembering that incorrectly three and a half three and a half okay yeah three and a half as of the end of august and and so to give you some context they they ended or they began june 1st of 2021 with 1 million subscribers in the next year they gained an additional 2 million net subscribers

for 3 million as of june 1st of 2022 as of the end of august they had three and a half When they report in a couple of weeks on November 15th, maybe they'll have three and three quarter million as of the end of the quarter, maybe four million as of mid-November. I don't know. We'll see. I'm anxiously awaiting that. Now, what I believe is happening is that they are likely using Google and performance marketing to attract customers and in an effort to convert them into prime subscribers. And so, while they picked up 2 million net new subs last year, their financials haven't reflected it yet because they incurred acquisition costs to get them, that being the performance marketing. Now, once they acquire a prime customer, when those customers rebook with eDreams, 75% of the time they come directly either through the app or direct to their website. And so there's very low reacquisition costs of that customer for future bookings. And so, while the financials have yet to reflect the transition to the prime business, they should start inflecting either this quarter or the next quarter as the prime subscribers that they gained last year, which were mostly in the second half of the year, have their first anniversaries.

oh that's fascinating what are there any competitors here um in the ota space because especially in europe i know maybe booking has a big presence and not really i can't remember exactly which brand i guess what i'm trying to get at is what what is stopping them from getting 10 million subscribers on the prime program and you know kind of dominating the european continent well on flights you have expia that's that's big in flights and e-travel i e-dreams is twice as large as the next largest competitor in flights. They're like three times as large as the third largest competitor. So they're the leader in flights. And 80% of the time, the first dollar spent in travel is spent in flights. And so what do they know 80% of the time? They know who you

are, where you're from, where you're traveling, when you're traveling, how much you paid for your ticket and so i think that gives them a nice advantage furthermore you know they they can sell they'll sell you hotels now so they'll sell you a flights and a hotel bookings is big in hotels right but bookings has agreements with their suppliers that they can't charge lower than what their suppliers are charging so like if you're if you're going to go to london and you find a Marriott, well, you can book Marriott at the same price you can book direct as you could on bookings. The interesting thing about having flights and a hotel is that you don't know where the savings are coming from. And so eDreams can essentially outprice bookings. And what's

booking going to do about it? Probably nothing except for seed some market share, because if get into a price war with them they're going to they're going to crash their margins on the business that they keep as opposed to seeding a little bit of of market shared e-dreams i mean it reminds me a lot of heiko i don't know if you know um in the the pma parts business but you know in that business ge makes a part for um for for at for for an airplane the fa gives has to approve all the parts that go into the plane, which essentially gives GE a monopoly until Heiko comes along and replicates the part and gets the part approved. Heiko charges 30% discount, captures 30% of the market. GE's not going to get into a war with them because why kill the margin

on your 70%? I think there's a similar competitive dynamic going on here. And so that raises the the question, well, Bookings is a big company with a lot of resources. Why don't they get into flights and dynamic packages like eDreams is doing? Well, their business is really more of a meta-search driven business. And so, you know, doing so would require changing how they do their business globally, not just in Europe. Can you give us a sense, I guess, of the valuation for eDreams? What do you think what are they valued at today? And then I guess,

what do you think the future holds in terms of earnings potential? Well, so the company's stated goals is a $180 million in EBITDA by fiscal year 25, which is March of 2024. So a year and a half out. But what they haven't really been to, what they haven't really said as loudly is that they still expect to grow in fiscal year 26. And the EBITDA of $180 million contains a massive amount of growth expenses that's running through the income statement as opposed to the balance sheet as a traditional manufacturing business would be. If GM builds a plant, that plant is amortized and depreciated.

The customer acquisition costs for eDreams to grow the prime program is running right through the income statement. So I suspect that the EBITDA is probably closer to 260 million euros if they achieve their fiscal year 25 revenue goals and they're still growing that business as opposed to the 180. and so you know right now you've got a 800 million euro ev business that should be generating ebita between 180 and 260 in a year and a half i mean what's what's that worth to you and i'm assuming it's pretty strong conversion to cash flow yeah yeah they i mean there's there's there's hardly any cap uh capex in the business and you know it's just tax and they got a little bit of debt so gotcha a very very high conversion i i think that i think the business is worth 20 to 30 euros today and i'm not i'm not alone in that there's there's a

there's a handful of very sophisticated investors in the stock i think i think their numbers kind of around the same area i think if you put a gun to management's head they'll probably tell you the same thing gotcha and for listeners uh the stock price is around four four twenty four dollars and twenty yeah four thirty four twenty low low fours today why so the stock results haven't looked too great this year why do you think that is well i if you go back to the 2015 when when the company ipo and then it had its issues with google i think a lot of the european institutional shareholders got burned on the IPO. And then the stock went below five euros. And institutionally, it may have been a problem for a lot of the institutions in Europe to hold the company

once it went below five euros. Coincidentally, in 2018, the company did receive a unsolicited bid from a competitor and this is while the turnaround was was working and uh the board unanimously rejected the offer it's not public what it was but i'm thinking it's you know north of seven euros a share which is materially higher than where the company's at today um but the company continued to work on the turnaround they got to a position as we discussed where they could buy back some shares the shares briefly got above five five euros six euros uh pre-covered so starting to work the the turnaround was starting to work and it was starting to be recognized by the market and then covet hit it went down below two euros per share

it got up to north of 10 euros at the end of last year Yeah. And then they raised a little bit of money, a little bit of equity, which, you know, some investors were upset that they did that. But the timing wise turned out to be great because it allowed them to refinance the debt in the business and do it at a pretty advantageous interest rate, you know, given what's happened subsequently. But that started them on a downtrend. And then within within a couple of weeks, you had the invasion in Ukraine, which which which which didn't help the sentiment. And so the way I look at it is that. You've got three different classes of investors in the stock right now. You've got 40 percent of it is owned by the two private equity firms that took a public. So there's a handful of savvy investors that have peeled the onion back and understand the prime program and understand the economics and understand that the financials will start to reflect those economics shortly due to the anniversary of all the prime program members that they've gained in the last year. and these shareholders know the value of the company and they're not going to sell

at today's price and so that's taken out of the market and so that leaves you with probably european retail and a handful of european institutions who are looking at the financials on their bloomberg terminal and not peeling the onion back and then seeing the sentiment from the inflation and news in europe and you know the war in ukraine and you know probably probably the marginal shareholder in the company is just you know very negative on the sentiment and that's not going to turn until the financials start to reflect the turnaround of the business yeah makes sense all right let's hit management before we hit our wrap-up question what are your thoughts on them i know you mentioned that you kind of you liked how they took advantage of the

higher stock price to issue some equity, but are they, do you think they, well, you're not like an activist or anything, but do you see them buying back stock, I guess, going forward? And how are they going to balance that between the debt load, which I think according to Coifin, you can correct me if this is the wrong number, it's about 400 million euros in debt. It seems like if they get to that EBITDA number, it should be fine to pay that down. But how much room do you think management have to buy back some shares. Right. Well, I think management is strong. And one of my risks that I identified or wrote down in my investment committee memo years ago was that one of the competitors could acquire eDreams in an effort to get the CEO or try to poach the CEO and hire the

away from edreams if you look at um you know the last ceo that was let go from expedia was was was let go because he didn't solve the google issue right and like what is dana done at edreams like he's he's solved the google problem and so i i'm really high on management they are quite thoughtful they're very long-term focused on the business which is nice to see as an investor uh I would see them paying some debt down before doing a share repurchase just because of the covenants that they have on their debt. I think that the market would probably view a debt pay down in the same way that it views a share repurchase. Why do you think, I guess, going back to the equity raise why do you think investors were upset about the equity raise if

they were able to pay down the debt i don't think they either the company's going to generate cash and i don't think the equity raise was needed i think the equity raise was was was pushed on them by the by the banks that are in the debt you know to be skeptical i would say that the banks did it to get fees um and what um that's not good but uh you know that being said i do think that the banks probably came out of wanting a much larger equity raise and management pushed back pretty hard and in the end it worked out because you know the interest rates shut up and they got a a nice rate and you know and were able to get a deal done now it would be much harder to do it Gotcha, gotcha. One more competitive risk I wanted to hit, because I know maybe any listeners in the US might be thinking of this, but it might not matter, is Airbnb. I know they have a pretty strong presence in Europe, but they might not overlap with eDream's business. Are they a competitive threat, or do you see that as kind of two separate parts of the travel market?

i would look at linkedin and looked at the people who used to work at airbnb in their flights program that was scrapped during covid airbnb wanted to get into flights so i would just say that if they really want to start that program up there's an easy way to do it buy e-dreams for ten dollars a share ten dollars a share 20 baby 20 20 yeah the uh all right well that that's an interesting uh i didn't think of that one airbnb uh that actually makes a lot of sense if they want to go to linkedin and start looking at people who used to work at airbnb in the flights program okay all right last question on e-dreams and we try to ask this with all our deep dives, pre-mortem.

How could the investment in eDreams go poorly? What could kind of go wrong here? Yeah, I think they're fairly insulated from a competitive position. I think that if it could go wrong, as I've said earlier, you have a handful of firms that own this company and know the value of it.

Some of them are in Europe. Some of them are in Asia. A lot of them are in the US. These firms own eDreams in a very high concentrated positions. If one of them had an issue at their fund, maybe with another holding that blew up and were redeemed, then that could put a lot of selling pressure on a company that already has low liquidity. That said, there are several savvy investors in the stock, and I imagine if somebody's blown up, then the rest of the investors would step up and buy the position out. okay last uh i have one more question we didn't write this one down but i'm you've been investing for a while i take it and we have a pretty young listener base so just sort of a general advice

question what kind of words of wisdom or piece of advice do you have for any young investors today well you know read constantly and and don't be afraid to ask for help you know particularly about people from people that are already in the business it's you know it's been my experience that people like to help people out particularly if that person's not going to be a threat to them young people aren't going to be a threat to an established investor you know feel free to reach out to them and be persistent okay perfect well uh for any listeners that want to i guess keep up with you or keep up with any of the holdings what are the best places uh i guess to do that Yeah. AviMariaFunds.com is our website. They can learn a lot about us there. They can give

us a call at 866-AVIMARIA. All right. Well, make sure to put the link to the website in the show notes so people can check out all your guys' information. All right. Well, that is going to do it. Thank you, Chad, for joining us. And thank you listeners for tuning in. We want to remind you guys that Brett and I are not financial advisors. Anything we say are discussed here on Chitchat Money. It's not formal advice or recommendation. We are, however, general partners at Arch Capital, so clients may have positions and securities discussed in this podcast. Thank you all for listening. Thanks again, Chad, for coming on the show. We'll see you guys next time. Hey, Simon, we wanted to ask you a few questions about 7investing so listeners could get

idea of what they're getting. What inspired you to start the company and what exactly is 7investing? Well, hey, Ryan, thanks again for having me. You know, from years of working in the investing industry, it was inspired by conversations with people that would just always have kind of the same negative perception of the stock market, right? It's too hard or I don't have time for this, for this to stack against me. And those conversations kind of led me to say, hey, we need to create a site that actually does inspire people to say, you can take control of your financial future. You can invest in stocks. You can find good stocks to buy and hold for long periods of time. And at the end of the day, too,

we know that everybody is different. We don't believe that there is one stock that fits for everyone, right? Maybe you're a dividend-loving, paycheck-cashing income investor that might want an option that's going to be a lower-risk dividend-paying stock, especially right now with the economy being what it is. And then other people might say, hey, I'm ready to hold on for 20 or 30 years. I want to take some swings for the fences. Let's go after those high growth opportunities. And so I said, this would be something that would be even more fun rather than just doing educational and by myself. I said, what if I brought together a team of seven advisors, all with a diverse background and a diverse perspective of the

stock market so we could uncover more stones and look at a bunch of different stocks with a bunch of different investing styles and a whole bunch of different industries. And so 7investing is kind of the genesis of all of those that we started in March of 2020. And we said, let's look at a whole bunch of different stocks. Let's do the legwork of the analysis. And let's present our seven favorite actionable ideas every month for investors to choose from. And let's start the conversation about which of these stocks is right for you and which one might be the right fit your portfolio knowing that investing is a very personal thing all right if you are a subscriber of seven investing what do you get can you give an overview of what subscribers get on the very

first of every month brett we release our seven new recommendations so we are uh coming up on october 1st here at least in the recording of this and you know on october 1st we'll release seven recommendation reports some of them will be low risk some of them will be high risk some of them will be biotech some of them will be financial services we run the full gamut and as a member you get immediate access to all of the new reports but you also get access to all of our old recommendations as well we track all of them in real time on our scorecard at 7investing.com recommendations and we also provide company updates on all of those previous recommendations as well we check in on how things are going and sometimes we even see red flags that we think

people should be aware of. There's risks for any opportunity at the time that you recommend it. And sometimes it's really needed for investors to kind of understand the risk and reward relationship. And then the last part of it is in addition to issuing new recommendations and providing updates on them is we know that this is a long-term journey. We know that investing is something that we want to take years, if not decades, to accomplish whatever we want to get to as the end goal. And so we always, every month, make it a point to be very available for our subscribers to ask us questions. We have a members-only call right in the middle of every single month. We have a community discussion forum that we have available 24-7 to not only

talk to our advisors, but also other investors. I think that's one of the key differentiators for 7investing is that we know this is a long-term journey. We know it's a very personal thing. We know they're going to have questions along the way. We don't want to just broadcast stock picks and disappear. We want to be here with you throughout this entire journey. And you mentioned, so seven recommendations each month, sometimes those might be repeats, but obviously there's a lot of companies now in the seven investing universe. So how do members get a grasp on the, the advisor's conviction around certain ideas? Like which ones Do they have a way of knowing whether advisors like certain ones more?

That's the most common question we've gotten, actually, since we started is, what's your favorite ideas right now? We've done the diligence on almost 200 unique companies now and put them on the scorecard. And people would say, hey, this is too much to keep up with. How do I even know where to start? And so we've kind of evolved as a company. One thing that we've started doing is best buys every month. each advisor gets to pick any of their or another advisor's previous recommendations and put the

flag on it that says, this is my best buy for October. And we publish those for subscribers. The other thing that we've started doing is issuing conviction ratings on companies that are also right there on the scorecard. So if you see a previous recommendation, we go everything from potential sell, which is the most negative flag we can put on a stock, to strong buy, which is the most positive bullish flag that we can mark things with. And you can filter through all of those to really quickly see here's some of our favorite opportunities. And we've taken this even one step further now, Ryan, which is we've created a strong buy portfolio where every quarter now we've gone ahead and self-selected as a team

through a pretty methodical process, our 20 favorite ideas, our 20 highest scoring companies that we've collectively come up with, our favorites of the entire scorecard. And we put these into what we're calling a strong buy portfolio that we publish each quarter. Also available as an added benefit for no extra charge for Seven Investing members. All right, last question here.

What does it cost to become a Seven Investing subscriber? And as we'll talk about, or we have talked about before, if you're a listener, use code money to get $100 off your annual subscription. That's right. We do have a monthly option. You can come in and check out the entire scorecard for a month just to see what you're looking

at for $49 a month. But our most popular plan is actually the annual option because it's at a discount to that. In fact, we've got a discount on the discount, like you mentioned, Brett. $399 for the year is our annual option price. But if you use money, the Chit Chat Money promo code, it's down to $300. So you're basically getting the subscription for half price if you sign up for the annual offer with that promo code.

That does not expire after the first year. As long as you remain an active subscriber, you get to lock in that $100 off a year benefit. All right. Well, as he mentioned, use that code money. Thanks for joining us, Simon. Thanks very much for having me.