Chit Chat Stocks - Will Stablecoins Kill Visa? Plunging Alcohol Stocks; Exciting Space Stock IPOs (BFB, V, MA, CRCL)

Episode Date: June 20, 2025

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. With Ryan out, we brought in Jason and Jeff from Investing Unscripted to the show. This week we discussed: (02:31) Exploring Stable Coins (05:39) Benefits and Downsides of Stable Coins (11:33) The Future of Payment Processing (17:47) Market Implications for Visa and MasterCard (22:16) Investing Perspectives on Stable Coins (26:35) Current Market Opportunities and Trends (37:04) Whiskey Market Dynamics (48:39) Market Bubbles and Pre-Revenue Companies (01:00:28) The Future of Space and Defense Investments FOLLOW INVESTING UNSCRIPTEDApple Podcasts: https://podcasts.apple.com/us/podcast/investing-unscripted/id1638200302 Spotify: https://open.spotify.com/show/7mbqwY9bh2JeNAOi7rBDRo YouTube: https://www.youtube.com/@InvestingUnscripted Newsletter: https://investingunscripted.beehiiv.com/ ***************************************************** 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 the Chit Chat Stocks podcast. My name is Brett Schaefer. And as you can maybe tell for anyone watching the show, Ryan is absent this week. He is on a, not a vacation, but a work trip.

Couldn't make it. He had a big name change at his company and some other stuff that they had to get through. But we have some special guests from Investing Unscripted subbing in for Ryan today. Jeff Santoro, Jason Hall, host of the Investing Unscripted podcast. They've been on the show before. Jason and Jeff, welcome to the Investing Power Hour. Thanks for having us. Happy to be here.

It's awesome to be back on. It's been a minute. It's good to be back on, though. Yes, it has. Yes, it has. We had a lot to discuss. We're going to be talking stable coins. A lot of audience members wanted us to talk stable coins.

We'll be talking that in relation to the payments networks, banks. some IPOs, a little bubble watch, really anything the three of us want to discuss. But first, before we get started, I want to talk about our presenting sponsor, Interactive Brokers. It is the professional's gateway to the world's markets. They offer commissions starting at $0 on US listed stocks and ETFs. They have international trading in over 200 countries. You can trade options, futures, currencies, bonds, funds, and more on 160 global markets from a single unified platform. We love it over here at Chitchat Stocks because of its ease of use, affordability, and the

ability to trade international markets, which we know and love. When placing your money with a broker, go with a broker you can trust. Make sure your broker is secure and can endure through good and bad times. We use IBKR here. It is a phenomenal platform and you can go to ibkr.com. Interactive Brokers is a member of SIPC. All right, gentlemen, what do we want to talk first? I mean, should we start with stable coins? That seems to be like the hot topic. Let's do it. Yeah. Anyone have any thoughts on these? I see. Where do we even want to begin

with stable coins because to me it seems like there's a lot of narrative out there people coming at it from so many different angles and from my perspective i'm no expert on them i kind of get confused on what is actually happening i can jeff do you want to start you want me to start go ahead so just the the basic idea of what stable coins do just for anybody i think most most of uh your your listeners and viewers probably know but just to be clear about it the idea with a stable coin is to have a blockchain asset that has a stable value. Because one of the problems with crypto as a tool for commerce and those sorts of things is the volatility, right? It's the reason people use dollars and the dollar is the global trade

currency, because generally you know how much a dollar is going to be worth in a week, in a month, in a year, right? And you don't have that with most cryptos. The idea of stable coins is they're one-to-one backed by some kind of a dollar-based asset that can be highly liquid, right? So Circle, right? They're the big name that's flying around now. With the USDC coin, they're the major entity behind it along with Coinbase. The idea is that for every dollar you give them to get $1 worth of stable coin, they're going to own some dollar-based denominated asset, right? So it's stable. The price is there, but it's also, it's backed by something real that most people think of as money, right? So that's the whole idea. Now bring that back to crypto. What's the whole point?

Why in the hell would anybody want to use this? If I'm a business, if I'm a merchant, one of the problems with traditional credit card acceptance, payment processing, all that kind of thing, there's really, there's two challenges. The first one is the cost. The second one is the velocity of money, the cost structure. If I run a little convenience store, my profit margins are probably three to 4%, right? They're super low between what I'm paying on interchange fees to Visa and MasterCard, the fees to the banks, all of those fees combined, the payment processing company, there's really those three layers of fees. If I could make those fees go away, I double my profits as a business, right? So it can be substantial. The other thing too is that

the average small business has like a few weeks worth of working capital um in the bank and with these payment processing networks you you somebody swipes a card you give them their good that they bought from you but you don't actually get your money for weeks right days to weeks before it actually flows into your accounts so that's the velocity of money part of it that is what building blockchain based payments, why it's so compelling for a lot of businesses is because you get the money as soon as it's, it's, it's essentially as quick as cash, right? You get the money. It just has to be actually worth money, right? Hence stable coins. Okay. Well, it seems like it will benefit the merchants if we're just saying the merchants in general as a whole entity

here. Yep. Are there any downsides to, does anyone suffer because of stable coins? What's kind of the bear case for why no one will want to use them so so again i'm not an expert on this either but here's my understanding so the issue before this well so we had this genius act that was just passed through the senate right so it's going to go to the house representatives we'll see what happens there and my assumption is something will come out of this that gets signed into law but in the absence of that i think the the risk was you're putting a lot of faith in these companies like Circle or like Tether, which has already had some issues, that they're actually going to keep those dollars that the stable coins are pegged to in safe assets

and not be super speculative with them, right? So without regulation, without legislation, that's sort of a gamble you're taking, at least in my mind. Now, the Genius Act, as I've understood it based on some articles I've been reading about it does seem to put some pretty good restrictions around what you can and cannot take those fiat dollars and invest them into. But I don't think it eliminates all risk. So if one of the things you're allowed to put those dollars in is short-term treasuries, and then there's a bank run on stablecoin, and all of a sudden millions of people want all their cash back, now Circle

is selling a bunch of short-term treasuries real quick, which could have broader implications for the whole economic they might actually they might not be able to turn a million dollars worth of treasuries into a million dollars of cash if they need to sell them quickly so maybe there's something in place where like only a certain percentage of your cash you know can be in treasuries and some of it has to be in just cash right i don't know like i don't know that level of detail but um so i to me though like here's what i can't stop thinking about there's the world in which this stays unregulated and unlegislated in which i could see the benefit of being an investor in a company like circle or you know it's or in crypto generally right there's

that speculative aspect to it that i think draws people in and the miners because the miners would replace the interchanges and the gas fees that they get for processing these transactions right they would be a beneficiary and when you say miners you mean say the cryptocurrency miners the ones that are using their computer systems data centers to say it's create the cryptocurrency i'm just trying to bring all the listeners they're doing the calculations right so and these are honestly it's funny these are actually more and more centralized than you think it's not as decentralized as the whole like the utopian idea of crypto is all of the entities that exist are very large centralized entities which again is it flies in the face of the like the crypto ideal

which is kind of ironic well that that's what i'm getting at like this is what i struggle with with as it pertains to stable coins and the legislation that just was passed and the circle ipo is like there's there's like a binary thing right there's like the wild wild west sort of crypto idealist world where this is going to be an alternative financial system and it's going to replace the dollar and then there's no governments yeah right decentralized all that stuff and now there's this centralized regulated legislated aspect of it so to me like if we just keep going down that path don't we just end up where we already are with i'm thinking the exact same thing with just faster money and and lower and lower fees like yes so like maybe it ends up

in a good place like it maybe that is a good innovation maybe that's a good future to to live in where it's just as stable it's just as safe as cash and dollars and credit cards but the fees are lower and it moves faster cool but i don't know i just can't help but think this feels like a solution in search of a problem right now let me let me play a devil's advocate with a follow-up here you mentioned the the gas fees you know creating these things i guess isn't um free like there is some total cost well there's a computer using electrocity and somebody had to buy the computer and set it up and it has to run right yeah so can those fees if we compare those to, say, Visa and MasterCard,

though they're 0.1% that they charge, can that be lower? And then second, again, I'm trying to play devil's advocate here. Yep. With the credit card companies, can people get convinced to switch off of their existing credit cards?

It feels like, is there a way to replace the cash back stuff, all that within the stable coin system if the profit pool is going to be lower? Go ahead, Jeff, and then I'll follow up. To your first question about how the fees shake out in the end, I don't know enough about this to say anything with certainty. But my general operating system for the financial system generally is somehow someone's going to figure out how to make money on fees to be the middleman. I don't care what the technology is.

I just feel like we will end up there at some point. And on a long enough timeline, I do think you could see this erode credit cards. Because remember, there was a time when people were, I'm imagining there was a time when people were probably hesitant to use credit cards, right? Like, the thing, Jason, I were talking about this the other day, like, will the three of us ever get to a point where we're totally comfortable leaving credit cards and using stable coins? Maybe. But is it likely that a kid who's two years old right now is comfortable doing that when they're our age? Much more likely. Possible. Yeah. So on a long enough timeline, I think almost anything can be disrupted. I just don't know that it's going to be in the time frame that most investors in a company like Circle are imagining. I'm just waiting for a deposit insurance and then it's essentially replicating the

banking system. So I think there's a couple things we're leaving out. Number one, I'm glad you mentioned deposit insurance because that's one of the things I'm thinking about. So a big part of the story that's happening now in real time this week is Stripe and Coinbase and shopify right you have a massive uh like rails of e-commerce business which is shopify that is now partnered with one of the biggest payment processors and coinbase which is one of the co-creators of usdc with circle and has a massive uh interest in circle right that

have are are unlocking you know millions of merchants access to be able to accept uh one of the the i think it's usdc is the biggest um it's bigger than tether i believe right um jeff it's the it's the biggest uh yeah i think so so unlocking that i mean that's a bit that is a big story right in terms of continuing to move closer and closer to something reaching market acceptance and as somebody that has used uh the shop app a lot more like i'm using that i'm still using amazon the most but by far the number two is uh the shop app for buying from individual merchants for all kinds of things right yeah tracking shipments i mean there's still i i have it on my phone there's a lot to be desired with it a lot of it's great to be made but there's potential

there there is right so again if these are precisely so yeah yes shopify has tons of big brands that use uh the shop the shopify you know system um but it's still the majority of of the revenues are derived from small businesses that are the ones that can directly benefit from lower fees and improve velocity of money right so that's great here's the key here's the catch though they are going to have to create some incentives you're going to have your early adopters of course that are going to use it. Right. And there's a lot of people that hold, uh, uh, stable coins because you do get a really high yield on it. Now the yield you're getting is in stable coin. But again, if it's backed by dollars, it's technically better. All right. So you got

your early adopters that are just, they're going to use it cause they, they're, they're on board already, but then you're going to have to start convincing people that it's better. Like, why is it better? You're sure. Okay, great. You, you make a little more money. That's great. Sure. I love you i want you to do well but why would i not just use my mx card that i'm getting these points for that pay for my vacation every year the whole ecosystem is that yeah right i'm not that's the magic stable coin yeah i mean that's the magic bullet that's it and the bottom line is that and we did uh jeff we did a video um that um i think it published on our youtube channel yesterday kind of talking through this and what the whole idea of stable coin leaves out

is credit cards okay not debit all right debit is is cheaper than than credit to process already so it's still not as cheap as stable coin but we haven't talked about what is going to replace credit i was talking to somebody i can't remember who it was i think it's a friend of mine here in town who was talking about his grandfather that opened a small business, uh, 60 years ago, right? A long time ago. And when credit cards became a thing, they were paying him to accept the card. Right. And, and the reason why is the network effect strength back then was the merchants. Now the network effect strength is the payment is the PR is the network, right? The payment network. And, and that, once that shifted, then Visa and MasterCard, American Express, Discover can, can say, okay, you, you want access to our, you know, 1 billion cardholders. All right. It's going to cost you this percentage, right? So, so that part of the structure kind of got built.

And then as the credit card, uh, offers were competing with one another, the, the, the points programs, the loyalty rewards programs, somebody has got to pay for that. The merchants always pay for it, which of course comes back to all of the consumers, uh, at the end of the day. So do I think blockchain can potentially replicate credit in the same way that it can replace the rails for debit payments? Sure. Why not? But again, there has to be money to cover the cost of these things. And that's the thing that I haven't seen crypto provide a real answer for yet. yeah let me uh let me put some numbers on circle for anyone that doesn't even know about this industry because you might think well this is kind of just some fairy tale thing that people

always talk about blockchain it is a sizable business there's 40 at least these are the numbers i have from their ipo documents 44 billion dollars worth in circulation 4.3 million wallets revenues 1.66 billion dollars and they pay a lot out to coinbase given their relationship And I think the main reason today people own it or use USDC is you can get 4.1 percent interest, similar to a high yield savings account if you hold it at Coinbase. I'm not sure the exact relationships here, but I think, yeah, there is given the fact that they're not a bank. And then according to this genius act that has just passed, they can really just hold cash and cash equivalents, you know, treasury bills, repos, money market funds and or putting it in a high yield savings account. I think there's limits on how much they're going to be able to offer customers until that can get fixed. And then I also agree that the big roadblock is consumer adoption, because I'm someone that follows American Express.

i think something like 60 of the revenue comes from those interchange fees which are going to be higher than with stable coins but they also have the annual fees paid um for credit card holders and the really high amounts of net interest income that they get from making you know credit card loans that gives them the ability to provide a ton of value to their customers you know not the merchants but they're you know the shoppers using their card their cards will the stablecoin companies be able to replicate that maybe but there needs to be some more work i think sure they can replicate it but somebody's got to pay for it right right so yeah we circle back again i guess this is my whole thing like that we just end up back where we are like that's

a good example that we're living through right now is the transition from cutting the cable to streaming nobody's paying less now than than they were you know 10 years you might have been seven or eight years ago like when when it was you know when we were just all starting to cut the cord but it's working its way back right yeah no it totally has totally the other the other thing i can't you know there's so many other questions i have about both stable coins generally the genius act so you know reading about the genius act it talked about how there's like three buckets of who can issue stable coins right there's banks and then there's like companies like there could be like amazon coin and walmart coin and then but then there was a thing that under i think 50 million dollars worth

of assets then it's regulated by states and then once you kick over that 50 million threshold then it like kicks to the then it has to go to like the federal legislation but it has a year to do that so like there's going to be all these weird little loopholes where there's a coin regulated by iowa that someone's doing something funky with somewhere else and it's not it it's 51 million dollars so in a year it'll be regulated by like there's all these weird things that i just you know people are going to find loopholes in because they always do same thing with know your customer stuff right like all of the anti-money laundering anti-crime aspects that are built into the financial system there's some of that in this act but again like what are the loopholes what are

ways around that i think those are things that that have to be uh you know have to shake out over time and the last thing is you know we're three people who pay a lot of attention to this because it's a stock story it's an investing story i like what's going to convince someone who pays no attention to all this like back to the consumer adoption to give up fdic insurance yeah and a free card like the cards again there's the fee cards like the travel or airline ones but right most credit cards it's pretty affordable for the consumer to have if you pay your bills on time and now what you have to have a an account at coinbase or some other website or you have to have a digital wallet or you know it's just there's so much clunkiness that i i just think

we're really a really far away from mass adoption even if this goes in the most generous direction for the next five or ten years i'm what i'm trying to decide is when this goes live how long is it going to be before we hear about a merchant on shopify that got wiped out of a hundred thousand dollars of stable coin that they kept because stupid lacks security on their end somebody you know got their password right and it wasn't in an fdic yeah and it wasn't in an fdic insured account so they have no you know fallback so and i'm sure again i'm a shopify shareholder And I plan to be for years and I'm sure they're working on things to try to help prevent those things from happening to the merchants. But I mean, there's just so many aspects of the reason the banking system is the way it is.

There's reasons, right? Like those fees we talked about, there's reason those fees are in place. And part of it is because the payment processors are so dominant, they get to set the fee. I mean, they set the price. They're not just price takers anymore. but the big thing is the merchants are going to want to have access to people that have money right and people that use credit cards on these reward programs are the people that always have money right so they're using the card because they get the points and then they pay it off every

month right those are the perfect customers to have and you don't get those for free okay i want to do another topic but to close things out bring it back to a stock related question visa master card i think american express to have dipped on this news you know the announcements from the rumors about amazon you talked about shopify coinbase and stripe if it dips more you know it gets to a price you feel is reasonable are these companies given the stable coin risk you guys would be willing to add to your portfolio or do you own them today i don't own them so we We were talking to a colleague, Jason and I, about three or four years ago at a get together.

I won't say who it is. And they told us at the time, he told us at the time, he had just sold all of his Visa and MasterCard because he was so convinced that blockchain was going to be the future. And so we, of course, did what all people do who are investors in the same room. We argued about it for like three hours. and my pushback and this is i will admit i'm coming at this from a a low level of like deep understanding right i've only really started to dig into this but my gut reaction and i think i still feel this way is visa and mastercard and american express are businesses that have been

around for a very long time they know exactly what has made them successful and they're aware of blockchain so i just i can't imagine a scenario where they get massively disrupted over the long term to the point where they're no longer worth being invested in because they didn't see the threat from stablecoin or from blockchain or from crypto generally disrupting them. It just doesn't seem like this is one of those disruptions that will come out of nowhere. I don't think they have their heads in the sand. I don't think they're blowing this off. So my sense is they will find a way to live in this new world to what extent it exists and to thrive in it, even if maybe the margins are a little lower, maybe they don't, they don't deserve today's

valuation, right? Maybe they're not going to be as dominant in the future. But A, I think I think that future's further off than other people do. And B, I think they could probably still be fine businesses, you know, even if a little less dominant. That's my take on it. I don't, I'm not interested in them at all. So like, I haven't really given much thought myself about whether I would or not buy, but I don't know that I would be selling out like our friend did a few years ago and just throwing my hands up and saying they're done. I own Visa and MasterCard, but I also own about 15 different crypto assets. So I want to be clear, anybody out there, any crypto bros that think I'm just a stodgy investor that won't change. So yeah, I actually own more crypto

than I do Visa and MasterCard, and I'm not selling my Visa and MasterCard. All right, that's good. I own neither they're on the watch list but i think this is a small risk right now could turn to a bigger risk at some point but like jeff said these are high quality businesses with competitive advantages and the time you get to buy high quality businesses is when there is some sort of uncertainty that popped up so if this causes them to go in a 30 40 percent drawdown that could be a good buying opportunity tbd though i i don't think right now the stocks aren't cheap um they're only down 10 yeah i just look they're never cheap but they're never if you look at the margins they get i mean they get better margins and like really good software companies do so just be mindful that

you're never going to get a great value on these hey never say never never say never fair fair okay fair let's just say you did get it but let's just play this out for another minute or so let's say you did get this incredible discount to what you think the the company is worth right if you get a 30 40 percent drawdown like like you said brett i still think you need to step into that potential purchase as an investor thinking about like position sizing right because yeah there's a 30 drawdown that gives you that opportunity but it's not for no reason right so i think like that big of a drawdown has to present enough risk into your thesis that like you want a that margin of safety that that drawdown has provided, but also be a position size in your portfolio that

you're comfortable with, just in case the worst case scenarios that cause the drawdown come true, right? So that's the last way I would think about it. Okay, let's hit another topic. I wanted to ask, since you guys are guests on the show, you're not on every week, like Ryan and I, you have different, you know, everyone's investing styles are different. What areas or stocks or what areas of the market have you guys interested today? I know a lot of people get, at least right now, you know, there's a lot of stuff that's trading at richly valued prices. And some people claim that, you know, oh, you should just take your money and go home right now. But I think there's plenty of opportunities out there. And I'm

kind of, you know, no matter what market environment there is, there's something interesting to look at. Jason, Jeff, what have you guys been interested lately? Jeff, you want to go first? You want me to go first? You can go first. So I think we're in this weird position with interest rates and with Trump's administrations, what they're doing with taxes and government efficiency, particularly around renewables, where I think there's a lot more opportunity than there is risk. One stock in particular particular that I like, I think like a lot right now is Brookfield Renewable. So this is the, it's basically like the operating entity of the Brookfield family for like renewable energy,

like utility scale, renewable energy stuff, everything from hydroelectric dams to solar farms to power transmission lines that connect those assets, wind farms, like all those things. And they're all over, they're in like 35 countries. So as much as like, this is a U.S. centric mindset right now that's sent a lot of these stocks lower. It is a massive global opportunity that they participate in. And Brookfield uses Brookfield Renewable to operate these assets. Most of the investment is done at Brookfield Asset Management. So they have a trillion dollars in assets under management. So they have a lot of very wealthy people in organizations around the world that bring them billions of dollars and say, okay, here's $2

billion. You've got it for 10 years and we want to invest in energy transition, right? So Brookfield Renewable is going to go out and find some deals and source them, is going to take an equity stake in it, a minority equity stake, but then Brookfield Asset Management, one of their funds is going to be the majority owner. So that relationship is really important. They're not just like dropping down debt onto Brookfield Renewable. So it's not like one of those like master limited partnership structures where they just get all the debt and the crap and the corporate parent just kind of gets the cash flows. It's structured differently. The stock's down a pretty good bit. The yield's pretty high. And I think as much as there's concerns about interest rates weighing on that

business and legislation changing the incentives, the global story is very, very compelling. They get cash flows on these assets. They sign 25-year contracts on these assets. So very stable, predictable cash flows, investment grade. So they have really good access to low yield costs. So basically they know how much their money costs and they know what they can get for these assets. And we get to just kind of ride along as investors and participate. Wow. Fascinating. Yeah. Seems like, again, there's the narrative with the renewable stuff that may be driving the stock down. Yeah. Well, it seems like maybe low risk, decent upside, like a very very stable company down yeah jason and i agree on this over the long term but we've

been arguing about like more short-term stocks in this space but like here's the way i think about it you know there are certainly short-term and maybe even median term headwinds in this country as it pertains to renewable energy right this is an administration that is openly hostile towards it and pro-oil and coal and gas and things like that uh interest rates are not helping the situation We'll see if we get rate cuts later in this year. But even if we do, we're still going to be at rates that are higher than we've seen in a while. My thinking on this is the economics of renewable energy, at least as I understand it, and Jason, you follow the space better than I do, so you can let me know if I'm wrong on this. The economics of these –

You're wrong. Thank you. Appreciate that. The economics of these industries I think are going to outweigh political interest at some point. The cheapness of solar and wind power is probably at some point going to just outweigh any political opposition towards it. So I'm long-term bullish on the renewable space. My struggle is, and I'm not going to come on an investing podcast and pretend like I have an answer on this because I think if everyone's being honest, they struggle with this too. I just have a hard time buying any of these stocks right now because I could see another 50% drawdown from here.

And I know you're not supposed to think that way, or some people say you shouldn't, but that's my struggle at the moment. Do I think renewable energy will be bigger 30 years from now than it is now? Absolutely. I'd be very certain about that. But could I buy these stocks now and have them be down 50% two years from now? Yes, I feel like I could. So it's a space I'd like to dig into a little bit more to build some conviction, because maybe I just start dollar cost averaging into some of these businesses that I that I have this long term belief in. But that's my struggle with that, with that space, just to kind of build off what you what you talked about, Jason. Seems like a lot of stuff blows up, not literally, but the stocks and the business models end up

blowing up in the sector. I guess the Brookfield one makes a lot of sense to me, because while you're not betting on, hey, we have this solar roof tile that may have terrible unit economics, said, we're relying on the subsidies to make that happen. Any areas for you, Jeff? I know you mentioned here something. Well, I don't have the notes in front of me. But yeah, what's interesting you? What's what are you researching at the moment? I'm interested in the macro at the moment. Like I can't stop thinking about what the second half of this year might look like with the impact we've yet to see with tariffs. So I'm sort of a macro watcher of the companies I think will be impacted to kind of see what they're saying. So it was pretty quiet on that front. I think through this

last earning cycle, you got a lot of generic slash maybe, yes, tariffs will impact this much on margins, blah, blah, blah. I'm curious to see if that changes in the next couple quarters. I have an AI interest that is not what I think is like the headline interest in AI. When people talk about AI, you hear a lot about the chip companies, right? What's NVIDIA doing? What's their data center revenue who's benefiting from that what's meta doing what's google doing or alphabet i should say i'm interested in the companies that on the enterprise side that are building these agentic ai products into their product suites right so i think about companies like adobe doing it with creative design i think about a company like service now doing it with

all other back-end technology that they offer enterprise uh companies because you know my my view of ai at the moment is that it's mostly a parlor trick for most people right like you can go to chat gpt and have it do fun stuff hey these are the ingredients in my refrigerator right make me a recipe random images yeah yeah i'm being a little bit flippant but like it's helpful it's cool it does neat stuff but like it's kind of a parlor trick at this point in terms of like mass adoption i i keep saying like when my parents use ai on a daily basis i'll believe it's here um but i do think the funny thing is when that happens jeff they probably won't even really be thinking about the fact that they're using ai no no that's my point yeah like i used i use the um

i use mobile smartphones as my analogy right like i you see people our parents ages you see people our grandparents ages like navigating the iphone no problem right if if you had shown me that picture in 1994 i would have been like what is happening what is this future you know this is crazy so i think when ai gets to the point where like yeah people older than us right whatever age that is are using it on daily basis and maybe not even realizing they are i think that's when it'll be here i think we're further away from that future than i a lot of uh evangelists think we are but i do think the place we're going to start to see it much quicker and it'll actually be helpful is in enterprise software and in our day jobs where we all have aspects of our jobs that

are annoying that take a lot of time, but you have to do them like the amount I have to click all these buttons in this stupid screen every day, you know, to do this thing. Like when AI can start doing that stuff for us, I'll start to say, Okay, that's interesting. So I'm I'm keeping an eye on the software, the enterprise software companies specifically that are talking a lot about it, building it in, because right now, it's a lot of talking about it and building it in and spending And I want to start to see them say, our AI revenues were up 80% year over year or whatever. I want to start to see customers of them paying up for these AI features that they're building in.

So that's one area that I'm interested in following because I don't think AI is a fad. I think we're in some level of a bubble when it pertains to the infrastructure spending potentially. But I want to see when it starts to get into our lives in a meaningful way. And I think enterprise software might be the next place that happens. Yeah. And hey, if there's an overbuild on infrastructure that can help some of these software companies, they're not the ones that are going to be hurt by that. Yeah. Fascinating stuff. Yeah. I have not thought of the renewables for a long time. Maybe. Hey, it's been a tough few years for that sector. Maybe it's the time to start digging in. we have some other topics we're going to be talking. I think an interesting company, Brown Forman, an alcohol former compounder that is down 70% from all-time highs. But first,

we have to talk about another one of our sponsors, Blue Chippers Club. It is a tight-knit community of stock-focused investors that you can join. And it was started by two friends of ours. Let me just go off script a little bit. For example, I did a research report this week for the podcast on a company called The Real Brokerage. I can post notes on it on Twitter, X, whatever you want to call it. And you don't really get much in response except some spam bots. But if I post it on the Blue Chippers Club, a nice little summary of the report with a link to the sub stack, I get some thoughtful responses and we get some conversations, some pushback on the ideas and really helping everyone become a better investor together. If you are interested in joining,

head on over to blue chippers club.com and hit apply tons of listeners of the chit chat stocks podcast i've started to join the link for that will be in the description or reach out if you have any questions okay let's talk brown foreman the stock is in a 68 percent drawdown um i guess for anyone that doesn't know they're the maker of jack i need to pour myself a jack daniels before you could not have picked you could not have picked uh help help with volumes they need a lot of help here um this is right in jason's wheelhouse the man loves whiskey they used to trade at a pe of 40 but it's now dropped down to 14 but when i look at the numbers from our friends at not finch at anymore fiscal.ai their operating earnings don't look that

appealing um i i'm seeing here on the chart their fiscal year i think it would be their fiscal year that ends in april of 2016 just over a billion dollars in operating income last 12 months 1.16 billion dollars so it's barely grown which i was surprised to see given that it usually trades at a premium valuation have you guys followed this company i think they're the alcohol alcohol sector has turned into a bit of a battleground because there's people that think it's turning into cigarettes and it's going away. And then there's other people that think,

hey, look, these are good companies with pricing power. And this is the one time we're getting them at 15 times earnings. Jason, it seems like you have some thoughts here. So why don't you go first? Yeah, I'm a bit of a whiskey collector. So I follow, and as an investor, of course, I'm going to pay attention

to what's going on with Brown Foreman. But basically what's happened with the uh spirits industry um is coming through the pandemic volume skyrocketed and demand went higher um and a lot of people started buying more like moderate to high-end spirits so brown foreman uh jack daniels woodford reserve old forester there's another one i can't remember that's they have they own four whiskeys they also own a couple of irish whiskey uh four bourbons they I own an Irish whiskey, some scotch, gin, rum. They have a full portfolio, but the whiskey business is a pretty big part of their mix.

Most of their volumes are Jack Daniels, right? Oh, yeah. No, that's a pretty substantial portion. So what's happened is coming out of the pandemic, two things happened. A lot of additional supply came online. I can't remember the name off the top of my head, but they're basically a contract producer for the spirits industry. company based out of Indiana that does a tremendous amount of production for a lot of the industry. And a lot of supply came online and then demand just kind of stalled. And we have a

lot of excess inventory across the industry right now. A lot of the distributor channels have been focused on selling through. So it's put a lot of pressure on a lot of the industry, um including uh brown foreman now the other thing that we're seeing too is a really fertile market for for brown foreman is uh europe and asia um and now with the trade war and we've seen this before going back to the first trump administration where uh the eu literally put in uh retaliatory tariffs against the state of kentucky now of course jack daniels is a tennessee product but uh a lot of their their whiskey so the the reason they went after kentucky was because whiskeys and at the time the um um i can't remember his name the uh uh was the speaker

of the house or the uh majority oh mitch mcconnell mitch mcconnell right so there were reasons why they specifically target it but the point is that we're in another political environment that could be unfavorable uh for really where they're the company's looking for a lot of their growth and that's selling into asia um so that that's another headwind and where i'm trying to kind of figure out and you've got something brought up on the screen is is this represent a value opportunity and and just kind of a weird place in the cycle where demand is going to recover or is this kind of like buying coca-cola in 2003 or 2004 where you're getting a good business and a dominant leader but the secular trends around consumption are disfavorable and yeah you'll make

money but you're not going to beat the market right you went from for that coca-cola example most of the 20th century just more consumption more volume growth and then that kind of switched in the 21st century and the whole business model changed didn't make them a terrible business but is not one you wanted to buy at 40 times earnings let me just for the listeners that aren't watching here i pulled up a chart quite easily on fiscal.ai as a side note use our link fiscal.ai slash chit chat get 15 off any paid plan it has whiskey shipment volume going back to say july of 2022 and it's declined at over five percent a year and that is that kind of covid bullwhip effect that jason was talking about i think the big question which i've seen people debate endlessly

is is it secular or cyclical i don't know yet but i feel like at this price 70 drawdown pe of 14 you still have probably plenty of pricing power within these products um the fact that you know they're not the reason that the bar sells you a $20 drink in at least at in seattle there's you know a bottle of whiskey is maybe 20 to 50 dollars or maybe even more but there's i i still think again with the premiumization and stuff like that there's plenty of room to just raise prices even if volumes aren't that um strong as they once were hey for me it feels like a good time to to take a punch and maybe take a position in one of these things it's i think it's it's hard there's recency bias in all of this with because you know the debate i hear is like you said at

the beginning of this topic brett like is this our alcohol companies alcohol sales going to go the way of tobacco because now people can you know marijuana is legal in more than half the states i think and you know you would want you would have to assume at some point it becomes federally legal, even if that timeline might be further out now. But that's only happened in the past 10, 15, 20 years, if you want to go back to the first state to legalize cannabis in any way. But the proliferation of it is really over the past couple years. And I don't know that I'm ready to say humanity has decided they don't want to have alcohol anymore after a few years of legal cannabis. Like people have been drinking for millennia. So, you know, but I think the

question is the first person got some funny honey. Right. But the question we all have to ask is, yeah, what type of let's, I think the way you'd step into an investment right now in a company like this is if, if consumption never increases from here, what's this company worth? Right. Or maybe you even want to map it out. If, if consumption, you know, that chart, you just showed whiskey sales down 5% over the past couple of years. So let's say you map out, all right, if consumption drops by 2% a year for the next 10 years, what does that look like in terms of what's this business worth? I think you have to kind of step into it maybe with that level of, of margin of safety thinking. Um, or maybe you roll the dice right now and just figure like,

okay small reasonable position in my portfolio risk versus reward i think this will recover and if not it doesn't kill me um because you know it could be the case that people just drink less moving forward i don't know i don't think it ever goes away entirely but uh for health reasons or because there's alternatives out there uh you know maybe it does uh change direction over the long term but yeah i mean that that bullwhip effect that jason and you just talked about in terms of like the pandemic boom overproduction too much you know too much supply i'd wait for that to shake out before i made any like definitive long-term uh predictions on this industry i'd rather be in alcohol than cannabis maybe i'm speaking too anecdotally but i grew up in a big

cannabis market the pacific northwest one where legalization was very early i think it was right when i was either in middle school or in high school and there was this initial boom and we had one of those where i think it was you didn't even need to have um the limited amount of licenses so all the pot shops dispensaries just blew up and there's so many out there and a lot of people started using it but i have found that a lot of my friends have started to quit because they would rather just have an occasional drink so it's not i would have high conviction in saying that alcohol is not going to get entirely replaced by cannabis and i would actually say cannabis probably is going through, in at least some states, an initial boom-bust cycle, and then it's going to have

some sort of stable consumption going forward. Here's the other thing that I think is worth thinking about, because again, the cannabis boom is recent over the course of, if we look at the long term. What I've noticed anecdotally in my friend group, and I'm 45, so my friend group is middle-aged people. Um, if I just went on anecdotal evidence, I'd say, wow, so many people I know have, cause we legalized in New Jersey a couple of years ago. So a lot more people in my age are, I would say like either occasional or maybe even regular users where they never were before because it was illegal and hard to get and all that kind of stuff. But you know what else happens when you, with most people, when you get to your mid forties, you start drinking less

because you, you know, the, the hangover that would go away by 11 AM the next day now takes three days so there there's that aspect of it too like like you move up the quality you you drink less but you you move up the quality that's another form right there you go right that's so exactly the point yeah it's just a very i guess my my what i'm trying to get at is it's a very short time frame i think to be making grand prog you know grand predictions on on where things are are heading and yeah there's the boom bust cycle that you just described right i think is is real um but you know the last thing i'll say is someone said this and it's one of those obvious statements that made me kind of chuckle you know i don't know maybe i'm wrong about this i'm not a

cannabis user but it is a weed like it's called weed for a reason and i don't know that we're ever going to get to a place where someone's like oh this is my preferred brand of this versus that i think it kind of gets you to the same point or at least that's my understanding but people do choose woodford reserve over jim beam over whatever whiskey because they like the taste whatever right so i just don't know that we'll ever get the brand loyalty in the cannabis industry that you see in some of these other things which just makes it in my mind like it'll just be like a crappy commodity yeah business forever yeah um yeah and and then there's like everything else there's plenty of people that have a bottle of jack daniels on their home bar because they

remember their grandfather had a bottle of jack daniels on the home bar so those like emotional switching costs i've started calling it or i think they're real and they carry over to spirits in ways they won't carry over to to cannabis okay anything else on that guys or should we move on to another topic let's roll now we have a few minutes left let's keep rolling yeah have you guys well i don't want to asking whether we're in a bubble or not is you know that's a tired question, but have you been tracking some of the 2021-esque market developments that we've seen from some of these pre-revenue companies? And did you see, maybe it was on our shared note document, so perhaps you clicked on it, this herbal medicine company from China that is up 64,000%

in the last few months? You know what I call that? I call that a good start. that would be quite i mean you could retire on that yeah regen cell biosciences holding holdings rgc is the stock listed on the nasdaq uh maybe they should investigate them i don't know here's an article from bloomberg incorporated in the cayman islands of course the firm aims to treat neurological disorders like adhd and autism uh through traditional herb-based medicines that's about it so i don't even know if you call them i just bought some shares while we were talking i'm i'm in yeah um uh i i say this is a bit of a joke and again this company has a market cap of 31 billion dollars as i guess yesterday i don't know what it's trading at well markets

closed today so that was where it closed yesterday what do you think about some of these pre-revenue companies hitting $10 billion in market cap, $20 billion in market cap, does it affect how you invest? Do you just kind of ignore it? Does it excite you at all? How do you go about it and try to balance that risk or not in your portfolio? I ignore all of this almost entirely. uh and but i also i sometimes wonder if that's because of just again like age right like i because what i think about when i hear when we hit these bubbly times right we you know 2020 second half of 2020 all of 2021 before we hit that long downturn in 2022 we certainly were in that place right spax every other day nfts everything you i thought i was the world's greatest investor

everything I did went up. And then you live through 2022, and you watch everything fall apart. And there's companies now that have not come anywhere near their 2022 or 2021 highs, even if they're good businesses, right? It was just a crazy time. And it does feel like we're heading back into that direction. What I worry about is, and I don't want to be like an ageist here. So I'll say less experienced investors who are seeing numbers like this and thinking to themselves oh man all i got to do is you know this thing's going going to the moon let me buy some shares and could they because they haven't lived through the other side of it yet um so i ignore it but i'm also like i've been through enough of these ups and downs as an investor to

know that the downs come uh so yeah i i find these just to be entertaining stories to you know make funny memes about on the internet but it doesn't change how i think about investing at all jason yeah i should probably he was just buying shares too because my guess is region cell might have some pretty good lawyers so i'm just i'm just not gonna no comment kind of a a little a little monger uh little monger uh i have i have nothing to add that couldn't possibly get me in trouble yeah yeah okay there was a good no you know what screw it i'm gonna say it they they have there is zero in any of okay go look at look at their

i'm trying to be nice here press release on their website announcing the ford stock split that just happened this week press release on june 2nd pre-announcing that the split was going to happen before that on their investor relations website was a press release from december of 2022 when their chief medical officer resigned yeah yeah nothing else between there form your own opinions on that yeah do the math yeah that brings up a good point as maybe even a lesson for listeners here the way a company manages its press releases can tell you a lot i looked at For example, we don't have to go through all of them, but they do one every day. Oklo or Oklo, the nuclear energy startup, O-K-L-O is the ticker.

Just go check out their press releases. There are some companies, I don't want to use the term, I have a nickname for them, that are very aggressive in their press release strategy. And that can kind of give you a hint on what management actually cares about. How interested would you be if a company issued two press releases within a four-week period promoting that their CFO bought stock? Yeah, it wouldn't get me excited. I think it might be a red flag. Yeah.

Yeah, that sums it up. I mean, when you learn about the way that Warren Buffett and Charlie Munger invest in Berkshire Hathaway, you read about them and you see there's like this – I actually do think there's a little bit of like a, God, I wish they could all be like this kind of vibe with how they do it. And they have the track record to back it up, right? It's everything you'd want. Not every company needs to be that. And we've seen some lesser lack of track record companies try to do the same thing. Like we're not going to have many press releases. We're not going to do earnings calls. And that works if you have a good track record, but it's hard if you don't, right? Investors do want information. So I think it's unfair to hold companies to that

standard. But there is certainly another end of the spectrum. If you view how management teams handle public relations, right, there's certainly a far other end that we're talking about now with some of these companies. And, and it's, it's very clear that the, the efforts on the PR side are to get people to buy the stock, and not to get the company to do things that makes people want to buy the stock and you can learn a lot about a company by seeing which of it is right it's there's the we want our stock to go to the moon because we have this amazing product that people love or we want our stock to go to the moon right yeah the product is the stock full stop yeah yeah i would go so far as to say that and this might be pushing a line but i'm going to say it anyway

if you know somebody that made thousands and thousands of percent in gains on a stock in a matter of weeks or months they got lucky or they broke the law yeah probably two yeah the two the two uh they broke the law yes that's it that's it yeah okay let's talk a real company one that i think is exciting and kind of shows that the ipo market is getting unfrozen a bit which i find exciting you know new companies to end up studying voyager technologies i don't have the ticker in front of me but it seems like a very interesting company in the space uh sector not like literally space space and defense uh debuted last week soared around 100 i'd say the ipo market is definitely opening up we're seeing a ton of companies come public which

does that mean you should buy them on the day of the ipo not necessarily and probably not but hey you can build up a lot of these companies on your watch list and they can be fun to study not an expert on this company but it looks like they are taking advantage of going public when there's a lot of um positive thoughts on defense and space systems so perusing their website they do space infrastructure signals intelligence communications and defense defense systems in space and actually just read this morning that they are doing some work around the replacement for the International Space Station. I think the timing of the IPO also helped

because there's the hype around the quote-unquote golden dome that could have $100 billion in funding. If you're one of those contractors, that could be quite lucrative. But the business is not too big today. Net sales of $144 million in 2024, up 6% year over year. I think the stock has a market cap of around $3 billion. They're losing a bit of money, $48 million loss from operations. um yeah this company has a high valuation today but

positive gross margins they're actually making gross margin yeah that's something so our friend tyler crow uh misfit alpha he did a write-up about it that had a ton of stuff he really dug into the s1 and there's definitely things to like um you know they're they have the largest of the uh what do they call it to like the thing that you connect the outside of the space stations if you attach your craft to uh module no no like it would open up into space the whole thing i don't know satellite no no you can tell i'm not an expert on this word games with jason anyway they have the largest something in space yeah so anyway the point is that it's kind of a bit of a game change when they have these that's going to be that it'll it allows you to be able to get

far larger things in and out of um uh space stations and things in orbit so gotcha so they they have some neat they have some neat technology and they're they seem to be in a good place they're definitely looks like they're favored they've got a big dod contract it's kind of like there's no set ending um so that's good um they have other big customers too lockheed martin is a customer some of the other big defense companies. I have one data point, one data point that makes me shudder. The founder and CEO has a 60% voting interest in the company.

He has a 5% economic interest in the company. He owns 5% of the business, but he can vote 60% of the shares. You better have confidence in him. whoever he is yeah yeah uh the the dual class it's become so more common and it just that seems egregious to me you know five percent gets you 60 whoo yeah well it goes it goes back to i mean i don't know anything about him or this company when i say this but like it goes back to what we were just talking about right like what is what is management's incentive you know

it's why you should read the proxy statement before you buy a stock see how they're being incentivized yeah and there i think there's two like there's downsides and upsides of the dual class share structure but it does add risk because you are essentially putting all your trust in this one person and they can have that long-term vision they can ignore any activist investor they can essentially do at the end of the day whatever they want but well it's you better trust them and they better be aligned with shareholders yeah you could get kevin plank which is great for the first 10 years and then it's been terrible since then right so that's that's the risk yeah it can unravel quickly if it can yeah it really can yeah but you also have the the metas the meta

platforms of the world exactly yeah well so start start with a good business i don't we're not sure if this one's a good business yet yeah exactly what it i kind of like this sector today though because and it could be wrong but i feel like over the next decade there is going to be a lot of spending within all this stuff where they are playing yep yeah yeah i agree generally i don't know that i put my faith in the golden dome but uh yeah we'll see if that happens yeah yeah but even absent of that i mean we we do have a space force now like you don't hear much about it but that actually did happen um so i i do think you're going to see more spending in this space for sure and the launches with uh new companies coming online like rocket lab and you know you still

space out there machines is really interesting too yeah yeah there's some neat stuff out there there's some good companies that are doing like good economic things yeah yeah definitely not a low-risk industry. You're not selling candy bars or maybe Jack Daniels whiskey, but... As Lou Whiteman says, space is hard. I mean, SpaceX blew up a rocket this week, so... Yeah, I saw that

last night. Yeah, you can literally have your product just blow up. SpaceX blows up a rocket every week, though. Yeah. Not every week. Hey, R&D budget. R&D budget. Yeah, maybe once a quarter. Once a quarter. That's a good pace. All right. Jason, Jeff, running long.

Thank you for joining the Investing Power Hour. today. Quick elevator pitch. Why should people listening to your podcast investing unscripted? Nobody has more fun arguing with one another than me and Jeff. I agree with that. That's a good way to say it. Well, here's my elevator pitch. You guys do such a great job at Chit Chat Stocks of breaking down companies, talking about specifics, financials, things like that. That's why I listen. Our vibe is more like two guys who like to talk about investing, just asking each other questions. Our tagline is asking the difficult questions about investing. Notice we

did not say answering them. We'll give our answers, but we encourage people to kind of come to their own conclusions. So we don't act as experts. We just sort of sound like two guys at a bar talking investing. And investing, there's picking stocks, and then there's everything else around personal finance and investing, right? And we like to have those other conversations too. All right. Yeah. And that's why the name Investing Unscripted is perfect. I'll have the link to all the platforms within the show notes video search spotify apple podcast youtube or really wherever you get your podcast investing unscripted it'll pop up give them a follow let's hit the disclosure and get out of here jason anything else before before we leave thank you this was this was great appreciate

it's always fun to be on all right let's agree thanks for having us we are not financial advisors anything we say on the show is not formal advice or recommendation ryan i well ryan's not here today or any podcast guests may hold security discussed in this podcast may have held them in the past and may buy, sell, or hold them in the future. Thank you for the few people that came on the live stream and asked a couple of questions. You can do that every Thursday when we go live with the Investing Power Hour

or listen wherever you get your podcasts. And we'll see you next time. Thank you.