The Best One Yet - 📉 “Another Big Short” — Michael Burry’s Voldemort bet. TJ Maxx’s all-time high. Fogo de Chao’s group dinner.

Episode Date: August 17, 2023

Brazilian steakhouse Fogo de Chao just sold for $1B – We found out how it makes twice as much money per restaurant as The Olive Garden. TJ Maxx stock just hit an all-time high and is now worth $100B — Because TJ’s hand-me-down strategy is paying off. And back in 2008, legendary investor Michael Burry (from “The Big Short”) made a billion-dollar bet against the housing market, and he was right — He just made another, even bigger, Big Short. $DRI $TJX $TGT $SPY Subscribe to our newsletter: tboypod.com/newsletter Want merch, a shoutout, or got TheBestFactYet? Go to: www.tboypod.com Follow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypod And now watch us on Youtube Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. It's Thursday, the new Friday, August 17th, and today's pod is the best one yet. It is a T-boy, Jack. T-minus two T-boys until our two-week summer vacation. We got two-week summer vacation coming up. Jack, what do you got going on? I'm actually doing the same thing I did last summer.

I copied and pasted the whole itinerary. Nothing like a Google Calendar rinse and repeat, Jack. It's the most German-American thing I've ever done. Expedio. We'll take two. Jack, what's our first story for today's pod? T.J. Max stock just hit an all-time high because T.J. Max is stealing clothing and sales from Target. Yadies, if you're a Maxinista, your company is now worth $100 billion.

For our second story, it's Fogar de Show. The Brazilian Steakhouse we all have an experience at just sold for over a billion dollars. Because groups taste better than dates. And our third and final story is Michael Burry, the guy from the Big Shore who made a fortune as the U.S. housing market tanked. Not to alarm you, but he just bet $1.6 billion on another big short. But Yetis, before we hit that fantastic mix. Hey, wonderful mix of stories before a holiday, Jack. First, happy anniversary to Alex. We've been together for four years. I was going to say, Alex, thank you for all you've given Jack. I love the family we're building and the life we live together. And thank you for that Ben and Jerry's ice cream truck at the wedding. Delicious. I do. Have another scoop.

But Yeties, it is still wedding season. We should be. point out. Yes, it is, you sandbagging son of a gun over there. This weekend, you may be on your way to a wedding. Crab cakes and football, that's what an August wedding does. Will that make you love me, Dad? But if you want to win this wedding, you're attending this weekend. If you want to nail the nuptials this weekend. We have some advice. Bring cash. Cause the music hit the ATM ASAP. According to Reuters, 85% of couples today would prefer cash to any other wedding. We repeat 85% of newlyweds want funds over furniture. They don't want a cake mixer.

They want cash. Jack, hold the china set. We want that cheddar. That's why the most popular new wedding registry item should be a savings account. Yeah, tell Anthony, just make a deposit and a note and move on. We're done. Because if the average wedding gift is, I don't know, $150 bucks per attendee. And if the average wedding size is, I don't know, 150 people per a wedding.

Then I'm going to look at the numbers. I don't know. That's $15,000. It could be a down payment on a house. Cha-ching, cha-ching, you're absolutely right, Jack. That is $15,000, a financial foundation to build a family upon. This once again proves, once again, cash is king. And it just married, the queen.

So besties, the next time you're attending a wedding. A little bit louder now. And you want to make that newlywed couple happy. A little bit louder now. Don't just bring a plus one. Bring a checkbook. A little bit louder now. Sorry, bring your Venmo account.

Hey! I do want to have. In our three stories. Fifteen years before this song, two boys from the Northeast met in the dorm. They had an idea that caused a cultural storm. It's the best one. 50%. That's a fat tip.

Tea boy city on your at list. If you know, you know, because we're ready to go. We can't wait no more, so just start the show. For our first story, T.J. Max's stock just hit an all-time high. T.J. Max is winning right now thanks to hand-me-downs. Corporate hand-me-downs. Now, Jack, let's whip open the history. history books over here. If Ferdinand Magellan, the famous 15th century explorer, we're alive today.

He would be a Maxineista. He'd be a Maxineista because T.J. Max is the home of the treasure hunt. You walk in for throw pillows and you walk out with Mariah Carey perfume. And to Ralph Lauren Polo. I'll take three of them actually. What the heck? Throw in the Steve Madden pumps. It's a Saturday. We're talking of course about T.J. Max. DJ Max. Based in Framingham, Massachusetts. Jack, can we get a geolocation on that place, please? Just outside of Boston, literally.

Yes, it is. T.J. Max, they're a large corporate entity that also owns home goods and Marshall's fellow retailers. And they just announced that sales jumped 8% last quarter, while profits jumped 23%. The stock of T.J. Max is now trading at a very expensive all-time high. T.J. Max, the physical manifestation of overstock.com, known for cheap prices, is now a super valuable company. T.J. Max's market cap just hit $100 billion for the first time ever. PJ Max can ensconce itself in velvet and it's not even going to care.

A funny thing Jack and I noticed in the earnings report, Yeties, the thing powering T.J. Max right now, it's hand-me-downs. Corporate hand-me-downs. Corporate equivalent of hand-me-downs. That's what's powering them right now. Because T.J. Max doesn't buy that perfume you bought a T.J.'s directly from Mariah Carey. Although I'm sure they would love to. She sounds nice. T.J. Max bought that perfume as leftovers from someone else. Exactly. Because, Jack, when Target's got too many tank tops, what do they do?

They send them over to T.J. Max. And when Macy's has too many duvet covers, what do they do? They send them over to T.J. Max. Well, those premium retailers have a little too much inventory right now, don't they, Jack? Nick, as a younger brother, I can tell you what happens when you're old. older brothers have too much clothes. Talk to me, Jack. It's handed down to you.

DJ Max is happy to receive those hand-me-downs, Jack. That is their business model. Because consumers aren't paying full price at Athleta, the older brother. They're finding that same pair of leggings half price at TJ Max. Younger siblings for the win. Older siblings appreciate your patience. So, Jack, what's the takeaway for our buddies over at TJ Max? Target's pain is TJ Max's game.

Yet he's when target struggles, T.J. Max wins. And you know what? It's happening twice. Target just announced yesterday that their revenues fell by 5% last quarter, which is great news for T.J. Max. Because first, targets lower sales mean that Target has extra inventory. And then they're going to give T.J. Max a call. The CEO of T.J. Max said that they're enjoying tremendous off-pricing buying opportunities right now. And second, Target sales fell because consumers are tightening their spending. They are looking for a bargain, a treasure hunt bar. Which means Target's customers went to TJ Max instead. So DJ Max just snag clothing and customers from Target last quarter.

Because in the business of corporate hand-me-downs, Target's pain is Tj Max's game. For our second story, the Brazilian Steakhouse Fogode de Show, was just acquired for $1.1 billion. We found out how a Fogor de Show restaurant makes twice the money as an Olive Garden does. But Jack, before we jump to the story, we gotta whip up that lesson we learned from our buddy Timmy. What is better than one rib-eye steak? Three of them at the same time. Yes, they are. That's the ground rules of the Brazilian steakhouse Fogar de show. Fogar de show at Chiris, a legendary all-you-can-eat experience. They serve you shrimp by sword. And that sword is held by a gaucho, which is a very attractive Latin American cowboy.

And you've got to fast for like three days in preparation of visiting this restaurant. Full disclosure, This is Nick. I've been in Brazil and America. And here's how this works. You don't just order from the waiter. You hold up a paddle to demand more food. Every diner is given a paddle. Red means no more food, please. Green means I'm still hungry. Bring me more food, please. And they bring you more food because the salad bar is bigger than a farm field. Founded in 1979 in Brazil, Fogar de show is the biggest Brazilian import to the United States since Pelae. Let's talk the numbers, Jack. Locations. 76 of them. Growth. 15% each of the last three years. Protein unlimited.

Yeti's Fogode de show Brazilian Steakhouse was acquired five years ago for $560 million. But it was just sold for twice that price to Bain, the P.E. firm known for Mitt Romney. This is basically the Benihana of Brazil. And now these Fogo de show investors are celebrating probably. Probably at Fogo de Scho. Probably at Fogre de Schell. More tilapia, please. Keep it coming.

Much obrugado. But sometimes there's one number that captures Nick and my attention as we analyze a story. Yes, there is. A hero number. And what was that hero number, Jack? Revenue per restaurant. Because Yetis, while you're devouring that flank steak, your third, each Fogodeusel restaurant is devouring cash. As you all know, Yeties, I'm an alum of Olive Garden. Yes, you are. And we love it. And the Olive Garden has ten times more restaurants than Fogu DeSho does.

But Fogu DeSho makes twice as much money per restaurant. bring it in $10 million at each location. Forget the endless breadsticks and the go-getter waiters. The big money is in the endless beef at Fogo de Shoe. Yes, it is. Now, yet is we know what you're thinking. Maybe the Olive Garden isn't the right comparison. So how about, Jack, we compare Fogo de Shoe to other steakhouses?

Fogar to Show offers you and all you can eat, salad, and meat offering for $59 per person. Which is less than a high-end steakhouse, where you're typically paying $100 on average per a person when you add in a couple sides. So Fogor de show serves a diner more food because it's unlimited at a lower price than a typical steakhouse does. And yet, each Fogu de show restaurant is making more money than the average steakhouse. What about this business model that's Fogar to show charge less, but make more? Is it the incredibly handsome Rio-trained cowboy waiters? Is it the Kaipriani cocktails? Is it the bottomless rib-eyes? What is it, Jack? It's our takeaway. So Jack, what's the takeaway for our buddies over at Fogo de Show?

This steakhouse doesn't do date night. This steakhouse does group night. Yeties, the reason Fogo de show, this Brazilian steakhouse is such a moneymaker, it's because it caters to large groups, not solo diners and daters. Big dinner parties is what Fogor de show does. And that's how they serve 60% more guests than competing restaurants. They basically figured out restaurant economics, that it's better to serve a few large groups than many small,

parties. Every waiter knows that. Yes, you do, Jack. Think about it. One giant salad bar, that requires lower preparation cost. And cut up the whole cow for the whole table, that saves on beef costs. And one big table is so much easier to serve than seven small ones. It's just more efficient. And that party at 12 celebrating Tammy's last day of work, they're not worried about the tab. Fogode Shoe's group dinner is a Disney-esque experience with paddles, and you're happy to pay more for another drink. Fogo de Show realized that restaurant economics favor groups over dates. For our third and final story, Michael Burry, the guy who predicted the 2008 housing crash just bet $1.6 billion against the stock market. The guy from the Big Short is making another

big short. So we're going to show you the bear case for the U.S. economy. The Big Short. That movie about the U.S. housing bubble and the financial crisis in 2008. Jack, I remember when we watched it. We was with our buddy Timmy, wasn't it? It's a great movie. I remember it too. We watched it when we're roommates. We're on 14th Street, 2nd Avenue, wonderful Thursday evening. Do you notice Ryan Gosling and Margot Robbie are both in that movie too? It's a great point. Was that like the first time they got together? That's pretty good. It was the first time they acted together. Great chemistry. I guess the Barbie director noticed. Make it three. Let's do a trequole guys. Well, another character in that movie was Michael Burry, who's a real person, but he was played by the actor,

Christian Bale. He was the character in the movie with the fake eye, the prosthetic eye. And he was really awkward, but he wasn't awkward when it came to money. Because in both the movie and in real life, Michael Burry bet $1 billion that the U.S. housing market was going to tank. He made that bet in 2005, and everyone said he was crazy because historically, the housing market never goes down. Real estate, it's just one of those investments everyone thinks will keep going up. But it stopped going up. It started going down. While the economy was tanking in 2007 and 2008, Michael Burry's bet was winning. And Michael Burry made a fortune on that bet.

He made a fortune betting against the U.S. economy. So, since he was the only one right about 2008, he's closely followed still today in 2023. That's why we're following what Michael Burry just did. Yeah. And what didn't Michael Burry just do, Jack? He made a $1.6 billion bet against the U.S. stock market. What we're saying, Yetis, is that he just made another big short. Call Michael Lewis.

He's got another book to write. Michael Burry made a $1.6 billion bet that the stock market will go down. Now, yet, he's just to sprinkle on more context here. If Warren Buffett is the Dumbledore of our stock market making us feel safe, then Michael Burry is the Voldemort. He just predicted stock market doom. Now, we're going to talk about why he's so bearish about the market in our takeaway in a few moments. We'll get to that in a sec.

First, let's tell you the one thing he's still bullish about. What is the one thing Michael Burry is actually excited about, Jack? He owns a bunch of stock in Expedia. Expedia, like the travel company. He owns 100,000 shares. It's actually his top holding. He owns a bunch of stocks, but Expedia is the biggest by far. Yet he's one of the most respected investors out there

thinks that you're still going to travel to the Amalfi Coast and the Magic Kingdom over the next couple of years. We should also note that Michael Burry owns a bunch of stock in private for-profit prisons. Yeah, there's some Voldemort vibes. But the sad thing about this Voldemort investor, sometimes he's right. And that is our takeaway. So, Jack, what's the takeaway for our buddy, Michael Berry? The same threat from 2008 is the biggest threat in 2023. That threat is debt.

Look, yet, by most measures, the U.S. economy is very strong right now. The stock market, the jobs market, the amount of business investment. It's all growing robustly. But here's the thing, debt? that can sneak on up on you. And when debt hits a tipping point, it kills spending. Now, during the pandemic, American debt actually fell by a lot. We saved money and a lot of people got stimulus checks.

But debt has risen back up in the meantime, and we just got two concerning data points to prove it. And here they are. Delinquencies on both credit cards and car loans are now both higher than from before the pandemic. More people are late on their credit card payments and their car loans than before the pandemic. Like we said, debt, it sneaks up on you.

That's why the same thing that brought us down in 2008 is the biggest threat in 2023. And that is debt. Jack, can you whip up the takeaways for us for the new Friday? T.J. Max was happy to take Target's extra clothing and targets customers last quarter. Because Target's pain is T.J. Max's gain. For our second story, Fogo to show.

It just got acquired for a billion dollars. That's a big price tag for a chain with only, 76 restaurants. Fogo to show's secret, big parties, not date nights. And our third and final story is Michael Burry. The guy who predicted the housing crash 2008 has made another big short. And the threat to the economy today is the same as it was then. Debt. Now we should point out that Michael Burry has been wrong before too. He's not right about everything. Yeah, we're not worried about one guy's pessimism. We're not worried about this one guy's pessimism. Now that we're saying it, I'm kind of worried.

But Yetis, this pod's not over yet. Here's what else you need to know today. First, we got ourselves a shortage of millionaires. Get this. The world lost 3.5 million millionaires just last year. Last year, the stock market tanked. And most millionaires' wealth is tied up in the stock market. And finally, remember VinFest, that Vietnamese electric car company we covered, like a couple

months ago, Jack? The cheapest EV you can find, like 25 grand. Well, their stock just went public on the market. And it surged. to a crazy, crazy high valuation. VinFast is now worth more than Ford or GM. Now time for the best fact yet. This one sent in by Brian York from lovely Denver, Colorado.

This week we said on the pod that Taylor Swift's concerts, just in Los Angeles, those six nights in a row, brought in $320 million to the region. But Brian points out that there is another summer event that also drives huge wins in the local economy. The Little League world. Series. The League World Series. It's the annual summer baseball tournament for little guys who are probably bigger than us, Jack. Full disclosure, my team won Vermont States. We made it to the regionals.

Full, full disclosure, I was an alternate on that team. My buddies went to the regional. We're going to round up on that one, Jack. We'll get this yet. He's the Little League World Series. Brings in $40 million of economic value just in central Pennsylvania. That is big economic value for little boys. That means the Little League World Series is one-eighth the size of Taylor Swift, which is not too shabby. Because every one of those players brings their parents and their family members to Williamsport, Pennsylvania. That's a lot of hotel rooms. Yeties, you look fantastic for the new Friday. And if you haven't yet, Jack and I love reading your reviews.

Your five-star reviews, they're delightful. We love your reviews so much. Nick and I printed them, and we each have a book full of your reviews. Jack gave me a book of your reviews. That's how much we love reading what you're thinking. If you leave a review, you'll be in the second volume of this review book. It'll be the best review yet. Jack and I will see you tomorrow.

And before we go, congratulations to Yeti's Netzel and Sharon, who just celebrated 38 years together over in Austin, Texas. And congratulations to Ryan Olhausen, who just got a senior reactor license. this man is splitting the Adam. And Chris Niebuhr, the grillmaster, has a new job over in Naperville, Illinois. I think he's controlling the Adam, actually. And Jacob and Laura have a new baby boy. Get this, get this, Jack.

The name? Wilder in California. Love it. And congratulations to Frank, you, who just finished competing on a Netflix baking show, and he lives in San Francisco, so Frank, we should meet up and have cake. The goal was spongy, you made it spongy. And happy birthday to Kathleen Tsai from China, celebrating that birthday over in San Francisco. Happy birthday to Vanessa in Cyprus, California.

And Roma Patel, happy birthday down in Naples, Florida. Right off the Tamiami Trail. Teresa McKinna, happy birthday over on Long Island. And happy 34th birthday to Brandon in Marquette, Michigan. And to anyone else, celebrate something today, make it a T-boy. Celebrate the wins. This is Jack. I own stock of Disney.

By the way, I see now that there's like wooden figurines on this. Are you kidding? I can't even see it. I can't see that. I need to bring in some some stuff. I keep on forgetting.