Motley Fool Hidden Gems Investing - Is Berkshire Bending the Rules With Bending Spoons?

Episode Date: October 15, 2026

When you think “companies Berkshire Hathaway likes”, often we think of mature, almost iconic businesses that have produced consistent results for years. Bending Spoons, an acquirer of legacy digital assets, doesn’t really fit the mold. Today, though, Matt, Jon, and Tyler take a closer look at why Berkshire is buying this Milan-based business and why it may be closer to the prototypical Berkshire business. Plus, emptying the analyst notebook on earnings and distressed debt is hitting neoclouds Have a question? Email us; [e-mail] Tyler Crowe, Jon Quast, and Matt Frankel discuss: - Bank of America’s earnings and money laundering fine - Fastenal’s earnings, a true hidden gem - The business behind Bending Spoons - Why Berkshire is buying more of this lesser known stock - Coreweave’s debt falls into junk territory. Who’s next? Companies discussed: JPM, BAC, TD, WFC, FAST, BSP, BRK.B, TRIP, YELP, CRWV, NBIS, ORCL, APLD, DELL, DOCN, Host: Tyler Crowe Guests: Matt Frankel, Jon Quast Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Did someone tweak the Berkshire Hathaway settings? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crow. And today I'm joined by longtime Fool contributors, Matt Frankel and John Quast. We're going to get into Berkshire Hathaway's. Some might say peculiar decision to invest more in bending spoons. We're going to talk about 15% interest rates at a certain neocloud company.

But we wanted to start because it is earnings week. And we're going to do a little bit of dumping the. analyst earnings notebook. And Matt, I want to start with you because on Tuesday we were talking about the big banks reporting, JPMorgan, Wells Fargo. We had Bank of America just report afterwards. In addition to the earnings report, there was a little bit of a oops, that wasn't great. So what exactly happened here? Yeah. So before we get to the oops, which was a $1.2 billion anti-money laundering penalty, it's worth mentioning that the earnings miss went beyond that. So the stock had a pretty negative reaction on Wednesday. It was the worst performer of the bank stocks in response to earnings.

And even without that penalty, Bank of America still would have missed earnings. The big reason is investment banking fees were down 11%. On the trading side, which was a strong point elsewhere in the industry, it was really not very strong at all. So the reaction makes sense. The bank did not have a great quarter. On the consumer side, it still looks good. But the trading, the investment in banking, it was much weaker than peers. All right. So I hear anti-money laundering and obviously bank, that's like a real no-go sort of thing. I remember a couple of years ago, I think it was TD Bank, which Toronto Dominion, it's changed

his name. I can't remember specifically what it may have changed it to now, but it had a similar problem with like its anti-money laundering practices and know your customer laws. And there was actually an asset cap that was put on top of it, on top of fines. Based on what you're seeing here with this one, is this a similar situation? Could Bank of America be headed for perhaps something more punitive than just a $1.2 billion fine? Well, it's worth mentioning these are two totally different situations. You don't want to hear this time's different in investing, but I'm going to do that right now.

So in Bank of America's case, it was the failure to report some suspicious transactions in a timely manner. They just weren't kind of keeping the controls as tight as they should have. They were already under a 20-24 order. All of this had, you know, happened between 20, I think, 2018 and 2025. And they essentially got penalized because they didn't fix their reporting process when they would see suspicious transactions. That's what Bank of America did. TD's was a criminal case.

TD actually had certain employees taking bribes to let money laundering transactions go through. That's a totally different animal. So unless, and I'm not saying it's impossible. Unless the investigation into Bank of America reveals something to that nature where it becomes more of a criminal matter than a just failure to act matter, then I don't think an asset cap is very likely. That's a tool that the government really pulls out only when it has to. Yeah, and certainly with TD and Wells Fargo asset caps have not been a fun thing to manage. John, I guess we could say moving on to something completely different here, I kind of left the

floor open. I didn't even ask what company you really wanted to hit in our analyst notebook here. So over the past week, we had a few that have reported so far. What was the one that kind of stood out to you that you wanted to maybe shed some light on here? Well, if I was just picking what I wanted to pick most, I would go with Taiwan semi. But this is the hidden gems show. And you got to give the listeners what they are looking for. I think they're looking for a little bit, something more under the radar than that. And so I talked about fast and all. I looked into Fassinol. I looked into fast and all. This is a cool little company. If you are a industrial player out there, you need some screws, nuts, bolts, that kind of thing. This is a company that can be your one-stop shop for that.

Really boring business, but hey, that's what keeps it under the radar and hidden. Really big quarter that it reported this week, 15% growth. Maybe that's not amazing by some AI standards, but hey, for a company such as this, that's actually a really great quarter. And it tells us some things. It tells us that U.S. manufacturing is quite strong. In fact, heavy manufacturing for Fasanol, that revenue source up more than 20% year over year. We're talking about strength in aerospace, industrial equipment, machine products, that kind of thing. All those are doing very well for the company. Now, it's not completely isolated from the AI trade, so about a third of its growth roughly is from data centers. So data centers need the nuts and bolts kind of

of stuff that it sells as well. So that was a tailwind as well for Fassanol, but overall, it's really pointing more to manufacturing strength than anything. When I hear a company like Fassanol, I mean, it's been one of those kind of behind the scenes businesses for a long time. And as you said, 15% growth is, I guess I should say, out of trend here for what it normally has done. So how has this company that I was just looking at its stock chart has done spectacularly. How is it created value for investors if it is kind of of this slow growth, I don't know, gives parts to companies sort of business. First and foremost, I mean, it does run a tight ship.

So, I mean, inventory levels are pretty much matching what it is generating in revenue. And that's a good thing. You don't want to be buying too much inventory. You want to keep that in balance. This is a good management team. And to that note, it really does prioritize its shareholders. And so definitely making moves that are shareholder friendly. One of the interesting things here is that it's debt.

It's total debt down to only $100 million. This is a $57 billion company, so that's really peanuts here, this debt level that it has. And it's down pretty significantly year over year. Then you look at net income, 82% of the net income going back to shareholders in the form of share repurchases and its dividend. Dividends around 2%, but that is growing nicely. So overall, this is a management team that does prioritize its shareholder base. Before we get out of here, we got two stocks here. We got Fastenol, we got Bank of America.

I'll put it to each of you guys who talked about this. Matt, buy-seller hold, Bank of America, even after this kind of flub or stumbling in the toe in this most recent quarter. I'm holding. The fact that they are being under observation for anti-money laundering is a yellow flag for me, even though this issue is in the past. It kind of opens up to some more scrutiny in this area in the future. So I'm holding.

I still own the stock. And what about you, John? Buy-seller, hold, fastinal. The one thing that does give me pause here, you are looking at a company that 15% growth that is unusually good, and normally in more of the single digit range, and right now trading it around 40 times forward earnings, that may be a little bit too hot to handle, even though the business is strong right now. All right, so two holes.

We'll see what's going. I mean, 15% growth on a fastenol, a company like fastenol is pretty spectacular. We'll have to check up on these in the fourth quarter and see what these. predictions had for the following quarter. Coming up after the break, we're going to talk about Berkshire Hathaway upping its stake in bending spoons. Guys, Berkshire Hathaway recently announced that it was upping its stake in bending spoons, which is, I guess, the best way to put it is like a media company, I think. The company soared like 40% yesterday after the announcement, and I'm guessing a lot of people this is the first time they've ever heard of bending spoons.

So, guys, let's just come right out at the beginning here. What the heck is Bending Spoons? What do they do? Bending Spoons, I don't know if I'd call them a media company or a tech company or a mini-Berkshire Hathaway. Bending Spoon, they're a Milan-based tech company. They buy struggling or neglected digital businesses, and they try to make them more efficient and profitable. So you probably haven't heard of the Bending Spoons name, as Tyler mentioned. but you might have heard of companies like AOL, Brightcove, Event Bright,

Bemeo, AirTable, these are companies that are in Bending Spoon's portfolio. It's completed more than 50 of these acquisitions so far, and their playbook is really too aggressively cost cut after they buy a business in order to like kind of squeeze every last bit of juice out of these companies. Yeah, as Neo was told in The Matrix, try to realize the truth. There is no spoon here. This is a growth by acquisition company. And we've talked about Baby Berkshires many times in the past.

I think this might be the closest one that I've seen to that. Normally when we're talking about baby Berkshires, it's companies that are investing kind of the float that they have in perhaps some publicly traded companies. But this is a company that is acquiring businesses outright and holding them for the long term. And that is very Berkshire-esque. You mentioned AOL.

You mentioned Airtable, Vimeo, Vimeo, however, anyone wants to pronounce that. These are a lot of, we'll call them like the island of misfit internet properties maybe as a way of putting it. I mean, I'm sure a lot of people lost money on AOL in the during the dot-com crash. So what is the investing appeal here? I mean, it doesn't sound like the most audacious business model here, John. Tyler, there is a difference between a company that is founded by a good founder, and that same guy being a good operator. I think Mark Zuckerberg is somebody who has really evolved a lot over the years

to become the man that he is today to be able to run this very big business. But sometimes those guys don't make the leap. They founded a business. It was a good idea. They were good for the startup stage, but they're not good at the operating stage. And really, that's kind of bending spoons is bread and butter. It's a good business.

idea and has a lot of attractive qualities, but it just needs better operations. And so it steps in here and tries to improve that. Now, we've heard that many times before and many other places, but that is what Benning Spoons is all about. They take unprofitable businesses, as we mentioned, and turn them profitable. Just the numbers show why it might be considered a good investment. We'll get into why it might be a Berkshire investment in a minute. But I mean, a 53% adjusted EBITOM margin from, you know, businesses that have long been forgotten. You know, 84% of their revenue comes from recurring subscriptions. That's another thing that, you know, a lot of investors love.

It's debt is reasonable compared to what it's getting out of it. And there's a lot to like about the numbers. They're turning all these businesses in the right direction. And, you know, like I've said before with other stocks, the proof is in the performance. And that's what we're seeing here. I'm kind of hearing this. And it's starting to bubble. to the surface a little bit

when I think about like Berkshire Hathaway-esque because, you know, at first I was like AOL event bright in the Berkshire Hathaway portfolio. I feel like just the name alone would have had Warren Buffett say, no, thank you.

But part of this is almost, it almost feels a little bit like the very, very early Berkshire Hathaway, right? Like, not necessarily, you know, there was like the Charlie Munger buy decent businesses at a good price. And then there was like

the early Warren Buffett where it was like, buy really, really cheap kind of cigar butt, let's just milk these things for the last sort of cash. Would you say that, you know, to make the comparison to a Berkshire stock, is this more of like that cigar butt style type of business? We're going to, you know,

get the last few puffs of smoke out of AOL or something like that? Yeah, I mean, sort of. It's like I mentioned the subscription revenue. I mentioned the high margins. It's a very disciplined acquirer. They only acquire a business. I mean, they only acquire about one four-hundredths, one out of every 400 companies they evaluate.

And they require a pretty high internal rate of return for it to even consider an acquisition. It's a very disciplined strategy. And a lot of it, they're acquiring brand names. They're acquiring these brands that are, they're essentially getting for less than the value of the name. And so they don't have to be that great performers. And there is still demand for a lot of the products

that these businesses have. I mean, I've used Airtable twice today so far. So, I mean, there's still demand for a lot of these products. And it's kind of, it is a lot of the Berkshire model. It's a capital allocator. It's got 50% plus margins that uses those margins to continue to fund more acquisitions. And it's not hard to see the connection here. It is a cigar butt business in a lot of ways.

but in a very early Berkshire way. All right, guys, last question. I'm going to, here's the thing. CEO of Bending Spoons is going to fly you out to Milan right now as an acquisition consultant. They want you to pitch some orphaned internet company in the vein of all these other ones. All the companies that we've analyzed before,

maybe some of the ones you've been following in the past as an analyst, who would you pitch to the CEO of Bending of Spoons right now? I considered Yelp and Expensify, but I'm going to let Matt talk about one of those, but the one I landed on was TripAdvisor. This is a company with a $1 billion enterprise value, and it is selling one of its properties called The For Fork for $700 million. So that values the rest of the business, what, down at $300 million?

You look at its second quarter free cash flow, $130 million from continuing operations. It is still growing in the experiences part of the business, albeit by single digits, but that's more of the Viator category that brand that it owns. And so there's a lot here for the bending spoons team to work with. And I've long said, TripAdvisor is an undervalued asset, but can the management team actually extract the value?

I think that bending spoons could go in, overhaul what needs to be overhauled, and actually turn this into a company that creates a lot of value for shareholders. Matt, that's a pretty good pitch. How are you going to top it? Well, I mean, my dream pitch for bending spoons would be Dropbox, but I think that's a little bit outside of its realm right now.

It's an $8 billion company. It would be by far the biggest deal ever. It's already highly profitable and has stalled revenue, so it's a great valuation. But I'll go with Yelp like John mentioned. I mean, Yelp, it's a brand everybody knows. Local businesses depend on it. There's a huge library of data in those reviews

to license to AI companies and other things. Data licensing is a really untapped part of the business. it has an adjusted EBITDA margin of about 22 percent. So a lot of room to expand that, which Bending Spoons loves opportunities to grow profitability. And it's just an iconic brand that isn't priced like one. I've got to say, you know, orphaned internet properties, I think that those are pretty good options here. It'll be interesting to see what happens with Bending Spoons and these acquisitions for even than going on. Who knows?

Maybe TripAdvisor and Yale Bend Up on it. Coming after the break, we're going to talk about bond yields and neoclots. Shares of Corweave are down about 15% yesterday, and as we're taping this right now, they're down about another 6%. A lot of this is coming down to secondary market trading of its bonds, which have moved into distressed territory, which I think is now the new euphemism for junk bonds that we used to have back in, I don't know, the 80s and 90s for anything that was below investment grade. So guys, what's going on here?

Why is the market seeming to price the bonds at Corleaves so poorly right now? It's kind of a perfect storm for fear in this category of the market. I mean, fear generally, the Fear and Greed Index is down to 26 today, which is close to extreme fear. But you look at some of the things that have happened. I mean, you have Elon Musk and Chamath Palo Papatia on X talking about how this whole space is a little bit under pressure right. now, but also Gartner coming out and saying 80% of the neoclouds are not going to be independent companies by, I think it was 2030 in the report. So basically questioning this whole space, that fuels fears, and man, that really does not help Corweaves bond trading. Yeah. Matt, do you see this

as a core weave specific problem? Or is this perhaps a little bit more, as, you know, John was hinting, like, the neocloud business of general, or maybe you might even see it spreading even further than just the neoclouds. Where do you kind of land on how far this goes? Yeah, I mean, the neoclouds and Corweave in particular are a business that I really want to like. And the reason I say that is because at some point, all these hyperscalers, all these companies building out data center infrastructure, they're going to need more, you know, kept more capital lightways to do it, and neoclouds could provide that solution. But Corweave is the most levered, which means that any cracks in the AI build out, if spending slows down,

we get a recession, whatever the case may be. It makes it really susceptible to that. But the stress is, it's spreading throughout the industry. Nebius, the other Neocloud, has a much healthier balance sheet than Coreweed, to be fair. But you're seeing companies like Oracle and Dell, their bonds are also trading much lower. Oracle's credit default swaps hit a record high yesterday. So the stress is definitely spreading throughout the industry. It's not a core weave specific problem. It's a AI debt problem. Yeah. And I mean, to that point, right? I mean, you look at core weave and it's nice that you mentioned Nebius because one of the things that comes into play here is the different depreciation schedule. So core weave at six years, Nebius at five years. And basically what this means is

that CoreWeave is expecting a longer useful life out of its GPUs. If you don't know what a Neocloud is this is basically selling AI compute over the cloud. But basically the problem here is if it does need to replace its GPUs at a faster schedule, then it's going to need even more funding to be able to do that. Nevius already, it's debt already factors that in, its depreciation already factors in a shorter lifespan. So that's another reason why Nevis might look more attractive here to investors than CoreWeave. Getting into some real in the weeds territory here talking about depreciation schedules on chips, but it is something that has been like, really at the forefront of what's been moving these stocks and these bonds recently.

I think I remember Nebius said something about their, you know, chips lasting longer and the stock absolutely soared as a result. So how long these go could be a big factor here. So as we kind of wrap up here, let's, I want to think about, we've mentioned a couple companies, but is there any else you have an eye on in particular where you think we could see this run into the capital problem where it's like we got to raise a lot of capital, we got to go to the debt, we've got to go to equity, and maybe they'll start to get tapped out. We've already mentioned Oracle, Nebius, Corweave, anyone else really on your radar here. I mean, I would mention applied digital. Their interest on their debts approaching their entire

annual revenue run rate, which, you know, it's fine if it keeps growing and growing and growing, but if it doesn't, then that becomes a problem very fast. That's one I would call out. I mean, I'll take the other side of that. One of the businesses that I think may be in a position of strength would be digital ocean. And it's not a neocloud per se, but this is a small cloud computing company, and it is getting a lot of benefit from the AI trade. You look at its debt levels, down nearly 400 million in the first half of the year. So it's actually going the opposite way with debt. And then you look at its revenue growth. I mean, we are growing very, very fast, accelerating even, and 29% growth in the most recent quarter. So this is a company that, man,

is in a position of potential financial strength, and that is particularly important if some of these neoclouds start to crumble. Well, I would say the really good aspect of this, you know, news story or discussion we're having on bond yields and depreciation schedules is that almost all of these companies report within the next couple of weeks. So we'll certainly be able to have answers on this and likely follow up in upcoming shows. But that is all the time we have for today. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy ourselves stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers.

Advertisements are sponsored content and provide for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks for producer Dan Boyd and the rest of the Motley Fool team. For John, Matt and myself, thanks for listening and we'll chat again soon.